Vehicle Token Tax Increase in Pakistan – The Ultimate Guide
The federal cabinet has officially approved a nationwide increase in vehicle token tax for 2025. This decision, made under amendments to the West Pakistan Motor Vehicles Ordinance, applies to private cars, motorcycles, commercial fleets, and public transport. For millions of Pakistani motorists, this means higher costs during annual renewals and transfers.
In this detailed guide, we’ll break down:
- Why the tax hike was introduced
- New engine-wise token tax rates
- Province-wise differences
- How to pay online or at Excise offices
- Impact on middle-class car owners and dealers
- FAQs with quick answers for easy reference
Overview of the 2025 Vehicle Token Tax Hike
The Cabinet Committee for Legislative Cases (CCLC) recommended this tax increase to address long-standing issues:
- Token tax rates had remained unchanged since 2019.
- Revenue collection for Excise & Taxation Departments had declined sharply.
- Traffic departments were facing budget shortfalls, affecting operations.
By revising rates, the government aims to:
- Increase revenue streams.
- Modernize Excise & Taxation systems.
- Discourage the growing number of unregistered or under-taxed vehicles.
What Is Vehicle Token Tax in Pakistan?
In simple words, vehicle token tax is an annual fee paid by vehicle owners to legally keep their car, bike, or commercial vehicle on the road.
- Legal Basis: The tax is governed by the West Pakistan Motor Vehicles Ordinance (1965) and its amendments.
- Who Pays: Every registered owner of a car, bike, or commercial vehicle.
- When: Usually during annual registration renewal, but it can also apply at ownership transfer.
💡 Tip: If token tax isn’t paid on time, penalties apply and the vehicle can be fined during road checks.
New Vehicle Token Tax Rates 2025 (Engine Capacity & Vehicle Type)
The revised structure introduces higher rates across engine categories. Below is a table comparing old vs new token tax rates (approximate figures; provincial notifications may vary):
| Vehicle Type | Engine Capacity | Old Token Tax (PKR) | New Token Tax 2025 (PKR) | Increase % |
|---|---|---|---|---|
| Cars | Up to 1000cc | 1,000 – 2,000 | 2,000 – 3,500 | +70% |
| Cars | 1001 – 1300cc | 1,800 – 3,000 | 3,500 – 5,000 | +65% |
| Cars | 1301 – 1600cc | 3,000 – 5,000 | 6,000 – 8,000 | +60% |
| Cars | 1601 – 2000cc | 6,000 – 10,000 | 12,000 – 16,000 | +60% |
| Cars | 2001 – 3000cc | 10,000 – 18,000 | 20,000 – 30,000 | +65% |
| Cars | 3000cc+ | 20,000 – 30,000 | 35,000 – 50,000 | +70% |
| Motorcycles | Up to 125cc | 300 – 500 | 600 – 1,000 | +100% |
| Motorcycles | 125cc+ | 800 – 1,200 | 1,500 – 2,500 | +80% |
| Commercial Vehicles | Varies | 5,000 – 25,000 | 8,000 – 40,000 | +60–70% |
👉 This table is for general illustration. Each province’s Excise Department will publish official notifications.
Province-Wise Token Tax Changes
Although the policy is federal, collection and enforcement remain provincial. Here’s a breakdown:
Punjab
- Excise & Taxation Punjab will revise token tax rates through ePay Punjab app and Excise offices.
- Payments can be made online, at designated banks, or Excise counters.
Sindh
- Sindh Excise Department will issue updated challans for cars, bikes, and commercial vehicles.
- Karachi car owners, who form the largest pool, will see significant increases for cars over 1300cc.
Khyber Pakhtunkhwa (KP)
- KP is expected to align rates with Punjab for uniformity.
- Online services are still limited compared to Punjab.
Islamabad Capital Territory (ICT)
- ICT Excise will issue separate rates but based on the federal framework.
- Token taxes in Islamabad are often slightly higher than provincial averages.
Registration & Transfer Fee Revisions
Alongside token tax, the government also plans to:
- Increase vehicle registration charges (particularly for new cars).
- Raise transfer fees, making used car transactions costlier.
For example:
- A 1300cc car that previously cost PKR 2,500 in transfer charges may now require PKR 4,000+.
- Used car buyers will need to factor this into total cost of ownership.
How to Pay the Increased Token Tax
Paying token tax is straightforward, and multiple options exist.
1. Excise & Taxation Office
- Visit your local Excise office.
- Provide vehicle registration book and CNIC.
- Pay cash at the counter and receive a stamped slip.
2. Online Portals & Apps
- Punjab: Use ePay Punjab.
- Sindh: Access Sindh Excise portal.
- Islamabad: Visit ICT Excise portal.
3. Banks & POS Machines
- Many banks partner with Excise Departments.
- Payments can also be made at ATM or POS machines.
💡 Pro Tip: Always save the digital receipt to avoid disputes during police checks.
Impact of Token Tax Increase on Car Owners
The increase has a wide-ranging impact:
- Middle-Class Families: Owners of 1000cc–1300cc cars (Alto, Cultus, Corolla XLi) will feel the pinch most.
- Commercial Operators: Buses, vans, and trucks will see higher annual costs, potentially leading to fare increases.
- Used Car Market: Transfer fee hikes may discourage frequent buying/selling, cooling the used car sector.
- Luxury Car Owners: 3000cc+ cars will face the steepest hikes, but the effect is less critical compared to middle-income groups.
Public Reaction & Expert Opinions
- Officials: Ministry of Interior justified the hike, citing inflation and stagnant revenue.
- Citizens: Social media reactions show frustration, with many questioning why fuel prices and taxes rise together.
- Analysts: Experts warn that higher costs may push some motorists to delay payments or avoid registration entirely.
Future Outlook – Will Vehicle Token Tax Change Again?
Tax policies in Pakistan are rarely permanent. Analysts believe:
- Rates may increase again in 2026–27 if inflation continues.
- Government may push for complete digitalization of token tax payments by 2027.
- There’s discussion of one-time lifetime token tax for motorcycles.
FAQs About Vehicle Token Tax in Pakistan
Q1: What are the new token tax rates in Pakistan 2025?
The revised rates vary by engine size. For example, a 1000cc car now pays around PKR 2,000–3,500 annually, up from PKR 1,000–2,000.
Q2: When will the new token tax apply?
The new structure will be enforced after provincial Excise Departments issue official notifications in late 2025.
Q3: How can I pay token tax online?
You can pay via ePay Punjab, Sindh Excise portal, or ICT Excise online system. Receipts are generated instantly.
Q4: Does token tax apply to motorcycles?
Yes, motorcycles are also subject to token tax, with rates doubling for most categories.
Q5: What happens if I don’t pay token tax?
Late payments attract penalties. Your vehicle can be fined or even impounded during police checks.
Q6: Will used car buyers pay higher charges?
Yes, transfer fees have increased alongside token tax, making used car transactions costlier.
Conclusion – Preparing for the New Vehicle Token Tax
The vehicle token tax increase of 2025 is one of the most significant fiscal changes in Pakistan’s auto sector in recent years. Whether you own a small car, motorcycle, or commercial vehicle, it’s important to:
- Stay updated with your provincial Excise Department.
- Budget for higher annual costs.
- Use online portals for faster, hassle-free payments.
In short, while the new policy increases financial pressure, it also pushes Pakistan toward better revenue collection and digital compliance in the transport sector.
Also read: How To Renew Car Token Tax In Pakistan: The Ultimate Guide