The federal government has amended the token tax, increasing the tax on private, commercial, and public service vehicles in Islamabad.
The decision was taken at a cabinet meeting on the proposal of the Ministry of Interior and Narcotics Control, with the aim of strengthening revenue collection.
Currently, vehicle token tax in Pakistan is being collected as per the West Pakistan Motor Vehicles Taxation Act, 1958, and there has been no major change in it for decades. The rates have also not been revised since 2019. Therefore, this tax increase will provide revenue generation capacity to the Excise and Taxation Department.
The target tax collection in the financial year 2024-25 was Rs 4.50 billion, while the department collected Rs 4.29 billion in taxes.
The ICT Administration (ICTA) has drafted the West Pakistan Motor Vehicles Taxation Act 2025, and this new proposed law supports an increase in the token tax for each category of vehicle.
It is also instructed that its actual revenue collection target will remain at Rs. 4.50 billion, and any revenue collected in excess of this will be used by the administration for the development of its department.
