Does the Increase Affect Total Vehicle Taxes?

Not entirely.

A vehicle owner's annual payment typically consists of three separate components:

Token Tax
Income Tax
Advance Tax

The latest amendment affects only the token tax portion. The income tax and advance tax components remain unchanged under the current notification.

Why It Matters

The revised token tax is likely to influence purchasing decisions, particularly among buyers considering larger-engine sedans, SUVs, and crossovers.

While the increase may appear modest in percentage terms, owners of premium vehicles with higher invoice values will notice a more significant rise in annual renewal costs.

Commercial transport operators may also need to adjust operating budgets as recurring registration expenses increase.

Pakistan Market Perspective

Pakistan's automotive market has already experienced rising ownership costs due to higher vehicle prices, increased fuel expenses, insurance premiums, and financing rates. The latest token tax revision adds another recurring expense for vehicle owners in Punjab.

For prospective buyers, total cost of ownership is becoming an increasingly important consideration, especially when comparing compact vehicles with larger-engine models.

CarAdvisers Insight

According to CarAdvisers' market analysis, the revised token tax is unlikely to significantly affect demand for essential passenger vehicles. However, it could encourage buyers to consider smaller-engine cars, hybrid models, and fuel-efficient crossovers that offer lower recurring ownership costs.

Fleet operators and commercial businesses may also reassess vehicle replacement strategies to manage higher annual operating expenses.

Source: CarAdvisers Data Analytics

Ownership Cost Comparison

Cost Factor	Before	After July 1, 2026
Annual Token Tax	Lower	Higher
Income Tax	Unchanged	Unchanged
Advance Tax	Unchanged	Unchanged
Total Ownership Cost	Moderate	Increased

What Should Buyers Do?

If you're planning to purchase a vehicle in Punjab:

Calculate the annual ownership cost before buying.
Compare token tax across different engine sizes.
Consider fuel-efficient or hybrid vehicles if recurring costs are a priority.
Factor annual taxes into your long-term ownership budget.

Explore CarAdvisers Services

Before purchasing your next vehicle, make smarter decisions with CarAdvisers:

Buy Me a Car for expert vehicle sourcing.
Car Inspection to uncover hidden issues before you buy.
Auction Sheet Verification for imported vehicles.

These services can help reduce ownership risks while making informed buying decisions.

Frequently Asked Questions

Has Punjab increased token tax for cars?

Yes. Annual token tax has increased for passenger cars with engines above 1000cc under the Punjab Finance Bill 2026.

When did the new token tax become effective?

The revised rates took effect on July 1, 2026.

Does the increase affect income tax or advance tax?

No. Only the token tax component has changed.

Which vehicles are affected?

Passenger cars above 1000cc and multiple categories of commercial vehicles.

Will smaller cars see a tax increase?

The announced revision specifically applies to passenger vehicles above 1000cc.

Final Verdict

The revised token tax structure marks another increase in the cost of vehicle ownership in Punjab. While the changes primarily affect larger-engine passenger vehicles and commercial fleets, buyers should consider annual taxes alongside purchase price, fuel costs, insurance, and maintenance when evaluating long-term affordability.

From CarAdvisers' perspective, understanding the full ownership cost has become just as important as choosing the right vehicle. Buyers who evaluate recurring expenses before purchasing are better positioned to make financially sound decisions in Pakistan's evolving automotive market.

Do you think higher annual token taxes will influence your next vehicle purchase, or will engine size still be your top priority?

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