The government of Punjab has increased the token tax on cars, announcing a tax reform package in the budget for the year 2026-27.
As per the authorities, the token tax on commercial and large vehicles, which are more than 1,000cc, has been increased after an interval of 20 years.
The car dealers, on the other hand, have been declared a withholding agent for the collection of tax.
As per the new reforms, the car dealers who are dealing unregistered would be declared not eligible for the government contracts, licences, and No Objection Certificates (NOC).
The government moved to this major step to enhance the taxation system of the province and to uplift its economy.
Punjab government increased the token tax on cars after two decades.
In its budget session on June 16, the government has also revised the sales tax rates and enforcement measures across various sectors.
According to the media reports, the new sales tax rates have been increased from 5% to 8%.
The hotels across the province will have to pay a sales tax of 8 per cent from onwards.
While the foreign exchange companies and currency exchangers will have to pay a sales tax of 3 per cent.
The “cotton fee” on the raw form of cotton has also been removed by the Punjab government in the new budget.
The new business starters would be entertained with a number of reliefs, as the government will not collect tax for the first six months of the business.
Meanwhile, the Punjab Revenue Authority (PRA) has increased the fines or penalties in case of tax violations, and the invoices are left unpaid.
The PRA has set the new fines starting from Rs500,000 to Rs1 million.
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