As part of the 2018 budget, the Punjab government increased the annual token tax for automobiles, effective July 1.
According to the revised policy, the vehicle’s invoice value. It will now be used to calculate the annual token tax rather than the engine capacity.
The tax on cars with engines between 1,000 and 2,000 cc will be 2 percent of the invoice price.
The tax for automobiles with engines larger than 2,000 cc is three percent of the invoice amount.
For cars with a displacement of up to 1,000 cc, the lifetime token tax has been raised from Rs. 15,000 to Rs. 20,000.
When a vehicle with a 1,000 cc engine is transferred. The new owner is required to pay the entire token tax once more.
10% Yearly Discount
The new owner will pay the lifetime token tax. With a 10% yearly discount if the ownership transfer takes place within ten years after purchasing an automobile. The lifetime token tax is not applicable after ten years.
These changes are expected to have a significant financial impact on car owners, especially in the used car market.
Newer, more expensive cars may pay more in taxes as a result of the switch from an invoice value-based tax system to one based on engine capacity.
The purpose of this regulation reform is to encourage openness in automobile transfers and raise tax income.
Nevertheless, it adds to the financial strain for car owners, especially those who buy expensive cars.
Additionally, in order to save money on taxes, consumers may choose to purchase less expensive cars as a result of this change in behaviour.
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