Punjab Revised Token Tax Policy for Vehicle Owners: Complete Detail

In a significant move within Punjab’s latest finance bill for the upcoming fiscal year, the Punjab Motor Vehicles Taxation Act has been amended, bringing about a new token tax policy for vehicle owners in the province.

New Token Tax Policy Details

New Basis for Tax: Token tax will now be based on the invoice value of the vehicle instead of its engine capacity.

Tax Rates:

1,000 – 2,000 cc Vehicles: 2% of the invoice value.
Above 2,000 cc Vehicles: 3% of the invoice value.

Lifetime Token Tax:

Vehicles up to 1,000 cc:
- Increased from Rs. 15,000 to Rs. 20,000.
- Full token tax to be paid again upon ownership transfer.
- If transferred within 10 years, the new owner pays with a 10% annual discount.
- After 10 years, the lifetime token tax does not apply.

The provincial government has introduced a policy that mandates the new owner of a vehicle with an engine capacity of up to 1000cc to pay the full token tax again upon transferring ownership.

Complete New Tax Rates

Rates	Token Tax MVT 2024-2025	Income Tax (Filer)	Income Tax (Non-Filer)
Motorcycle at time of registration	1,500	–	–
Car 1000 CC	20,000	10,000	30,000
1001 to 1199 CC	1,800	1,500	4,500
1200 to 1299 CC	1,800	1,750	5,250
1300 CC	1,800	2,500	7,500
1301 to 1499 CC	0.2% of Invoice Price	2,500	7,500
1500 CC	0.2% of Invoice Price	3,750	11,250
1501 to 1599 CC	0.2% of Invoice Price	3,750	11,250
1600 to 1999 CC	0.2% of Invoice Price	4,500	13,500
2000 CC	0.3% of Invoice Price	6,000	18,000
2001 to 2500 CC	0.3% of Invoice Price	9,000	27,000
2500 above	0.3% of Invoice Price	10,000	30,000

Furthermore, a professional tax of Rs. 200 will apply to all vehicles regardless of their engine capacity.

Annual Token Tax Changes

Under the revised regulations, the annual token tax for vehicles will no longer be determined by engine capacity (cc) but by the vehicle’s invoice value.

Vehicles 1000cc to 2000cc: An annual tax of 0.2% of the invoice value will be imposed.
Vehicles Exceeding 2000cc: The annual token tax will be 0.3% of the invoice value.

Lifetime Token Tax Adjustments

Additionally, the lifetime token tax for vehicles up to 1000cc has been increased from Rs. 15,000 to Rs. 20,000.

When transferring ownership of a 1000cc vehicle, the new owner will be required to pay the lifetime token tax, with a 10% annual discount if the transfer occurs within 10 years. However, if the transfer takes place after 10 years, no lifetime token tax will be charged.

Financial Impact on Vehicle Owners

These changes are expected to have a financial impact on vehicle owners, particularly those involved in the used car market. The shift from engine capacity-based taxation to invoice value-based taxation could lead to higher taxes for newer, more expensive vehicles.

This policy is likely designed to increase tax revenue and promote transparency in vehicle transactions. However, it also places a heavier financial burden on vehicle owners, especially those purchasing higher-valued cars. The long-term effects of this policy on the automotive market and tax compliance will be closely watched.

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