The Punjab government has proposed a substantial increase in annual vehicle token taxes as part of its budget for fiscal year 2026-27, alongside a series of tax reforms targeting vehicle registration, transfers, and property taxation.
According to the budget proposals presented by Punjab Finance Minister Mujtaba Shuja-ur-Rehman, annual vehicle token taxes could increase by up to three times across various categories. Under the proposed revisions, the existing annual tax of Rs2,200 would rise to Rs6,600, while the Rs4,000 tax would increase to Rs12,000. Similarly, vehicles currently paying Rs6,000 in annual token tax could see the amount rise to Rs18,000, whereas the Rs8,000 tax slab is proposed to be increased to Rs24,000.
The budget also recommends raising withholding tax rates on vehicle registration and transfer transactions. The current rate of 0.2 percent is proposed to increase to 0.3 percent, while the existing 0.3 percent rate could be raised to 0.4 percent.
In another significant move, the government has proposed granting motor dealers the status of withholding agents. The budget further seeks to make vehicle registration mandatory before delivery, preventing dealers from handing over vehicles until the registration process has been fully completed.
For the property sector, the government has proposed making property tax payments exclusively through electronic systems, effectively phasing out manual payment methods.
The budget also includes a proposal to impose a quarterly surcharge on property tax defaulters. Currently, surcharges are applied on a monthly basis for unpaid property taxes.
The proposed measures are part of broader reforms in the Excise and Taxation Department aimed at improving tax collection, increasing compliance, and modernizing administrative procedures across Punjab.
