Under the proposed Federal Budget 2026–27, vehicle owners in Islamabad could see a major increase in token tax, potentially making car ownership more costly for a large number of motorists. The revised taxation structure is aimed at generating additional revenue, but it may also place added financial pressure on individuals already dealing with rising living expenses.
According to reports, vehicles with engine capacities of up to 1000cc may be subject to a fixed annual token tax of Rs. 20,000, marking a significant jump compared to previous rates. For mid-range vehicles, the government is considering a tax of 0.25 percent based on the vehicle’s invoice value, which means owners of newer and more expensive cars could face considerably higher payments.
Luxury vehicles with engine capacities above 2000cc are expected to be taxed at an even higher rate of 0.35 percent, reflecting the government’s focus on increasing taxes for high-end car owners. The revised framework also includes motor cabs, commercial transport, and other categories of vehicles, with different rates depending on engine size and type of usage.
If approved, the proposed increase could directly impact thousands of citizens, especially those who rely on personal and commercial vehicles for daily commuting and business operations. Analysts believe the higher token tax may also contribute to increased transportation and logistics costs, which could eventually affect consumers through higher fares and service charges.
