Punjab Increases Token Tax on Petrol Vehicles from July 2026
The Punjab government has officially approved an increase in the annual token tax for petrol vehicles with engines larger than 1000cc, effective from July 1, 2026. This decision was included in the recently passed Punjab Finance Bill 2026 and will impact both private passenger cars and commercial vehicles across the province.
Previously, the token tax rates were set at 0.2% of the invoice value for cars with engines between 1000cc and 2000cc, and 0.3% for vehicles above 2000cc. Under the new amendments, these rates have been increased to 0.3% and 0.4% respectively. This change means owners of petrol cars with engines exceeding 1000cc will face higher annual token tax obligations.
For commercial vehicles, the token tax hike is even more significant. The revised annual token tax rates based on laden capacity are as follows:
- Vehicles with laden capacity from 4,060 kg to 8,120 kg: increased from Rs. 2,200 to Rs. 6,600
- Vehicles with laden capacity from 8,120 kg to 12,000 kg: increased from Rs. 4,000 to Rs. 12,000
- Vehicles with laden capacity from 12,000 kg to 16,000 kg: increased from Rs. 6,000 to Rs. 18,000
- Long trailers or vehicles with laden capacity above 16,000 kg: increased from Rs. 8,000 to Rs. 24,000
This revision will lead to a substantial rise in the annual ownership cost for commercial vehicle operators in Punjab.
It is important to note that the token tax forms only one component of the total payment required from vehicle owners, which also includes income tax and advance tax. The approved changes apply exclusively to the token tax portion of the total payments.
The Punjab Finance Bill 2026 formalizes these changes, which aim to increase provincial revenue. The government has not indicated any changes to fuel prices as part of this bill, focusing instead on tax adjustments related to vehicle ownership.
Vehicle owners in Punjab are encouraged to review these changes ahead of the July 1, 2026 implementation to prepare for the updated taxation structure.
The increase marks the government’s ongoing efforts to reassess vehicle taxation rates in line with inflation and developmental funding needs.