ISLAMABAD – Owning a car in Pakistani capital is about to become more expensive as the government approved major increase in vehicle token taxes, with owners of older 1000cc cars facing annual charges of up to Rs20,000. National Assembly Standing Committee on Finance approved substantial increase in vehicle token taxes in federal capital, with certain categories facing tax hikes of up to 100 percent as authorities seek to boost revenue collections, despite strong objections from lawmakers who argued that the additional burden would fall primarily on middle-class citizens already struggling with rising living costs. The development has drawn significant attention from observers and officials across the country.

The Broader Picture

Several key factors have contributed to the current state of affairs.

DC Islamabad said vehicle token tax rates in the federal capital had remained unchanged for the last seven years, whereas all provinces had already revised their tax structures.

Under newly approved framework, vehicles with engine capacities of up to 1000cc manufactured preceding 2010 will now be subject to an annual token tax of Rs20,000, compared to the previous one-time fixed tax of Rs10,000, doubling the financial burden on owners of older vehicles.

Adding to the complexity of the situation, for vehicles ranging from 1000cc to 1300cc, the tax formula has been revised from 0.3 percent of the total invoice value to 0.25 percent, resulting in substantially higher annual payments for many owners.

Expert Analysis

The reaction from the broader community of observers has been significant.

Cars manufactured before 2010 in this category will pay around Rs2,500, while post-2010 models could face token taxes of around Rs.

Meanwhile, sources familiar with the matter indicate that a vehicle valued at Rs2 million would now attract a token tax of Rs.

At the same time, representatives informed committee that Islamabad collected Rs3.9 billion in vehicle token taxes during the current fiscal year, with 19 percent of payments made through digital channels.

Impact on Americans

Looking at the practical effects, the outlook remains significant and wide-ranging.

Following the latest increase, authorities estimate annual collections could surge to Rs.

In a related development, several lawmakers questioned the rationale behind imposing additional taxes on motorists who already pay substantial levies through fuel purchases, vehicle registration, and taxes at the time of purchase.

Observers have also noted that others questioned why token taxes must be collected annually and suggested that a lifetime tax system should be expanded to all vehicles to reduce inconvenience and administrative burdens.

In a related development, critics challenged the government s justification that additional revenue is needed for road maintenance, arguing that existing collections should already be sufficient to meet Islamabad s infrastructure requirements.

Notably, budget 2026: Toyota Corolla prices may surge by up to Rs3Lac after New 6 % Levy The post New Token Tax announced for 1000cc and above vehicles in Islamabad appeared first on Daily Pakistan English News.

Looking Ahead

As the full scope of these developments becomes clear, questions about what comes next remain at the forefront. Officials and analysts agree that the situation warrants continued close attention.