Vehicle owners in Islamabad may soon face higher annual charges after lawmakers approved a major revision in the capital’s vehicle taxation system. The National Assembly Standing Committee on Finance has approved a significant increase in Token Tax rates for several vehicle categories.
The revised structure is expected to increase the cost of owning and maintaining vehicles in the federal capital. Officials say the changes are aimed at boosting government revenue and bringing Islamabad’s tax rates closer to those already implemented in other provinces.
According to officials, vehicle tax rates in Islamabad had remained unchanged for the past seven years. Authorities argued that a revision was necessary because other provinces had already updated their taxation systems.
Under the new framework, owners of vehicles with engine capacities of up to 1000cc manufactured before 2010 will now pay an annual Token Tax of Rs20,000. Previously, these vehicles were subject to a one-time fixed tax of Rs10,000. The change effectively doubles the financial burden on owners of older cars.
For vehicles ranging between 1000cc and 1300cc, the taxation formula has also been revised. The rate has been changed from 0.3 percent of the invoice value to 0.25 percent. Despite the adjustment, many vehicle owners are expected to pay higher annual amounts under the new system.
Officials explained that vehicles manufactured before 2010 in this category could face taxes of around Rs2,500 annually. Newer models may be charged approximately Rs6,200 per year.
For example, a vehicle valued at Rs2 million would now attract a Token Tax of around Rs6,200. Under the previous structure, the same vehicle owner would have paid only Rs1,500.
The government expects the revised policy to increase revenue collections significantly. Officials informed the committee that Islamabad collected Rs3.9 billion in vehicle token taxes during the current fiscal year. Following the latest increase, annual revenue is projected to reach Rs5.2 billion.
However, the proposal faced criticism from several lawmakers. Opponents argued that the new charges would place additional pressure on middle-class citizens already dealing with rising living costs.
Some committee members questioned why motorists should pay higher taxes when they already contribute through fuel levies, vehicle registration fees, and taxes at the time of purchase. Others suggested expanding a lifetime tax system instead of collecting annual payments.
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Despite these concerns, the revised tax structure has received approval and is expected to be implemented after completion of the required procedures.
