(Web Desk) — Effective July 1st, the Punjab government has introduced a revised annual token tax policy for vehicles as part of the new budgetary measures.

Under the updated policy, the annual token tax will now be calculated based on the invoice value of the vehicle rather than its engine capacity. Vehicles with an engine capacity between 1,000 and 2,000 cc will be taxed at 2% of the invoice value, while vehicles with an engine capacity exceeding 2,000 cc will face a 3% tax rate based on the invoice value.

Additionally, the lifetime token tax for vehicles up to 1,000 cc has been raised from Rs. 15,000 to Rs. 20,000. Upon transfer of ownership for vehicles up to 1,000 cc, the new owner must pay the full lifetime token tax again. However, if the ownership transfer occurs within 10 years of the vehicle’s purchase, the new owner will benefit from a 10% annual discount on the lifetime token tax. After 10 years, the lifetime token tax exemption no longer applies.

These changes are expected to significantly impact vehicle 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 and more expensive vehicles. This policy adjustment aims to enhance tax revenue collection and transparency in vehicle transactions but may place an increased financial burden on owners of higher-value vehicles. It could also influence consumer purchasing decisions, potentially leading to a preference for less expensive vehicles to mitigate tax expenses.