The Punjab government has enacted the Punjab Finance Bill 2024-25, introducing several changes and amendments to the Punjab Motor Vehicles Taxation Act.
Among the proposed changes to the Motor Vehicles Taxation Act, the government has introduced a new token tax in the region. This new token tax policy targets vehicle owners in the province.
According to the new regulations, a new owner of a vehicle with an engine capacity of up to 1000cc will be required to pay the full token tax again when transferring ownership.
Punjab Annual Token Tax
After approval of Budget 2024-25, the annual token tax for cars will no longer be based on engine capacity but as per invoice value.
Lifetime Token Tax
The lifetime token tax for 1000cc vehicles has been increased to Rs20,000, up from the previous fee of Rs15,000.
When transferring ownership of a 1000cc vehicle, the new owner must pay the lifetime token tax with a 10% annual discount if the transfer occurs within 10 years. However, if the transfer happens after 10 years, no lifetime token tax will be charged.
These changes aim to generate higher taxes from newer, more expensive vehicles. The move is likely intended to boost tax revenue and promote transparency in vehicle transactions. However, it also places a heavier burden on vehicle owners, especially those purchasing higher-valued cars. The policy's long-term effects on the automotive market and tax compliance remain uncertain.
