Annual motor vehicle token tax in Pakistan
What token tax is
Token tax is the annual provincial tax on a motor vehicle, collected by the excise and taxation department of the province where the vehicle is registered. It is entirely separate from the federal taxes you paid when buying the car, and you pay it every year for as long as you own the vehicle.
Because it is provincial, there is no single national rate. Punjab, Sindh, Khyber Pakhtunkhwa, Balochistan and Islamabad Capital Territory each publish their own schedule, and each revises it on its own timetable.
Islamabad has changed the basis
The most significant recent change. The Finance Act 2026 abolished the fixed engine-capacity token tax for larger engines in Islamabad Capital Territory and moved to a percentage of the vehicle's invoice value.
| Engine capacity | ICT annual token tax |
|---|---|
| Up to 1000cc | Fixed fee, reported at Rs 20,000 |
| 1001–2000cc | 0.25% of invoice value |
| Above 2000cc | 0.35% of invoice value |
We handle the computation, the minimum-tax comparison, statutory accounts and the annual filings together.
Avail our corporate tax servicesThe provincial position
The other provinces continue to publish their own schedules, generally built around engine capacity, seating capacity and vehicle category, with separate treatment for commercial vehicles. Rates, concessions and the availability of lifetime token payment for smaller vehicles differ between them.
Because these schedules are revised through each province's own finance act and notifications, a rate table reproduced on any third-party site goes stale quickly. Take the figure from the excise and taxation department for your province of registration, and keep the receipt.
Three different vehicle taxes people confuse
| Charge | Who levies it | When | Adjustable? |
|---|---|---|---|
| Advance tax on registration, section 231B | Federal, income tax | Once, at registration | Yes, against income tax |
| Token tax | Provincial | Annually | No |
| Sales tax, FED, NEV levy | Federal | Once, in the purchase price | No, for a private buyer |
The first is covered in the section 231B guide, and the third in the EV and hybrid tax guide. Only the section 231B collection is adjustable, and only if you file — which is one of the clearer arguments for filing if you are buying a vehicle.
Practical points
- Pay before arrears build. Unpaid token tax surfaces at transfer, and a buyer will not complete on a vehicle carrying it.
- Registration province, not residence province. Moving cities does not move the liability until the registration moves.
- Keep the receipts with the vehicle file alongside the registration book and the section 231B evidence. If the vehicle appears in your wealth statement, that file is what supports it.
- Check filer status before registration. The section 231B rate differs between filers and non-filers, and the difference on a new vehicle is usually larger than the cost of filing a return.
Source check: 14 September 2026. The Islamabad Capital Territory change from fixed engine-capacity token tax to 0.25 per cent and 0.35 per cent of invoice value, and the reported Rs 20,000 fixed fee up to 1000cc, are drawn from published reporting and professional analysis of the Finance Act 2026 and have not been verified against the enacted text. Provincial token tax rates are set by each province and are deliberately not reproduced here, because they are revised on separate timetables and a stale table is worse than none — take the current figure from the excise and taxation department for your province of registration.
Sources
This guide is written against the official and clearly labelled professional references below. Rates, thresholds and portal procedures change between reviews, so open the primary source before relying on a figure.
Questions people also ask
Why did my Islamabad token tax change so much this year?
Because the basis changed rather than the rate. The Finance Act 2026 abolished the fixed engine-capacity token tax for larger engines in Islamabad Capital Territory and replaced it with a percentage of the vehicle invoice value — 0.25 per cent annually for 1001 to 2000cc and 0.35 per cent above 2000cc. On an expensive vehicle that is a substantially larger annual bill than the flat figure it replaced, which was the intention: the charge now scales with what the vehicle actually cost.
Do I pay token tax in the province where I live or where the car is registered?
Where the vehicle is registered. This catches people who move: a car on a Sindh registration remains a Sindh liability even after the owner relocates to Punjab, until the registration is transferred. If you have moved province and kept the old registration, check whether transferring is worthwhile before another year accrues.
Is token tax the same as the advance tax I paid at registration?
No, they are separate charges under separate laws. Advance tax on registration is a federal income tax collection under section 231B of the Income Tax Ordinance, adjustable against your income tax liability. Token tax is a provincial tax on the vehicle, payable annually for as long as you own it, and is not adjustable against income tax.
What happens if I do not pay token tax?
Arrears accumulate and are generally recovered with a surcharge when you next deal with the excise department — at transfer, at re-registration, or on a roadside check. The practical problem usually surfaces at sale, because a buyer will not complete a transfer on a vehicle carrying unpaid token tax, so the liability lands at the least convenient moment.
Do electric vehicles pay token tax?
Token tax is a provincial charge and provinces set their own treatment, including any concession for electric vehicles. The federal concessions for EVs run on sales tax and customs duty, not on token tax, so do not assume an EV is exempt. Check the current schedule published by the excise and taxation department for the province of registration.
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