The Punjab government has announced an increase in the annual token tax for vehicles, effective from July 1st, as part of the new budget.
New Tax Policy
The updated policy states that the annual token tax will now be determined by the invoice value of the vehicle instead of its engine capacity. Here are the new rates:
- For vehicles with an engine capacity between 1,000 and 2,000 cc: The tax will be 2% of the invoice value.
- For vehicles with an engine capacity above 2,000 cc: The tax will be 3% of the invoice value.
Lifetime Token Tax
The lifetime token tax for vehicles up to 1,000 cc has also increased:
- New Rate: From Rs. 15,000 to Rs. 20,000.
When ownership of a vehicle up to 1,000 cc is transferred, the new owner must pay the full token tax again. If the ownership transfer occurs within 10 years of buying the car, the new owner will pay the lifetime token tax with a 10% annual discount. After 10 years, the lifetime token tax does not apply.
These modifications are projected to have a significant financial impact on car owners, particularly in the used car market. The shift from engine capacity-based taxation to an invoice value-based system may result in higher taxes for newer, more expensive vehicles.
This policy change aims to increase tax revenue and promote transparency in vehicle transactions. However, it places an extra financial burden on vehicle owners, especially those who purchase high-value vehicles. This change may also influence buying behaviors, with buyers potentially opting for less expensive vehicles to save money on taxes.
Stay informed and plan accordingly to manage the new tax rates effectively.