Tax on Vehicle Registration Pakistan 2026
Token Tax, 231B Advance Tax & Transfer Tax

When you buy a new car in Pakistan, the advance income tax under Section 231B is one of the largest upfront costs after the vehicle price. Non-filers pay up to four times more than filers for the same car. In addition, provincial token tax is paid annually. This guide covers every tax a vehicle owner in Pakistan faces — from first registration to annual token, transfer, and commercial use.

Section 231B — Advance Tax on Vehicle Registration

Section 231B advance income tax is collected by the Excise department at the time of first registration of a private motor vehicle. The tax amount depends on engine capacity (cc) and filer/non-filer status:

Annual Token Tax — Provincial

Token tax is a provincial levy paid annually to the Provincial Excise department (not FBR). It is separate from income tax and is not deductible against income tax. Rates by province vary:

Token tax is paid through the provincial Excise portal (Punjab: excise.punjab.gov.pk, Sindh: excise.gos.pk). Most banks also accept token tax payment using the vehicle registration number. Token tax is due annually and failure to pay attracts late payment surcharge plus inability to transfer the vehicle.

Advance Tax on Vehicle Transfer

When a registered vehicle is sold/transferred to a new owner, advance tax is collected again at the time of transfer. The rates at transfer are typically lower than first registration:

Both buyer and seller should be filers to minimize transfer costs. Like first registration tax, transfer advance tax is adjustable against annual income tax liability.

Electric Vehicle Exemptions

Pakistan's Electric Vehicle Policy provides incentives for EV purchases:

• Electric vehicles (fully battery-powered) are exempt from Section 231B advance tax at first registration
• Import duty and sales tax concessions apply on EVs under the EV Policy
• Annual token tax is reduced for EVs (varies by province)
• Commercial EVs (electric rickshaws, delivery bikes) also qualify for reduced advance tax

Commercial Vehicle Tax Rules

Vehicles used for commercial purposes (goods transport, taxis, ride-hailing) face different tax treatment:

• Goods transport vehicles: Subject to Section 234 fixed tax (annual WHT on route permits — see transporters blog)
• Commercial passenger vehicles (taxis, ride-hailing): Advance tax under Section 234 applies
• Vehicles owned by companies: Section 231B applies at company level; the company can claim the credit in its corporate return
• Leased vehicles: If a leasing company purchases for lease, they pay 231B and pass the credit benefit to the lessee per their agreement

How to Claim Vehicle Tax Credit in Annual Return

1. Obtain the vehicle registration certificate showing advance tax paid and the Excise department CPR number.
2. In IRIS Form 114(I), go to Tax Credits → Adjustable WHT.
3. Select Section 231B — Motor Vehicle as the WHT category.
4. Enter the advance tax amount and the registration/CPR number.
5. IRIS credits this amount against your annual tax liability.
6. If total advance taxes (231B + bank WHT + any other adjustable WHT) exceed your annual liability, the balance can be claimed as a refund.

WHT on Used Car Purchase from Manufacturer / Dealer

When a vehicle is purchased from a manufacturer or authorized importer (brand-new), advance tax under Section 231B is collected at the excise department upon registration. For purchases from dealers or auctions of used/imported vehicles:

• Locally-assembled brand-new vehicles: 231B WHT collected at excise registration in the buyer's name
• Imported vehicles (Customs-cleared): Additional advance tax may apply at customs stage under other WHT provisions
• Dealer / auction purchase (grey import): Buyer pays Section 231B at registration in their name
• Used vehicle registered in another person's name: Transfer tax applies at transfer; previous 231B stays with original registrant

Vehicle Tax for Non-Filers — Full Cost Comparison

The cumulative cost difference between a filer and non-filer buying a car extends beyond registration:

A middle-class family buying a 1500cc car saves Rs. 140,000 at registration alone by being an active filer. Kamboh Associates NTN registration + first return filing costs Rs. 5,500 — a 25× return on investment from the first vehicle registration alone.

Step-by-Step: Vehicle Registration at Excise Office

1. Purchase vehicle and obtain invoice from manufacturer/dealer.
2. Confirm your NTN and Active Taxpayer List (ATL) — check via SMS to 9966 or iris.fbr.gov.pk.
3. Visit provincial Excise and Taxation office or NADRA e-Sahulat centre with CNIC, invoice, and NTN.
4. Excise officer calculates Section 231B advance tax based on engine size and your filer/non-filer status.
5. Pay the advance tax via PSID generated by the Excise office. Payment options: 1-Link ATM, internet banking, or bank branch.
6. Pay provincial token tax for the current registration year.
7. Obtain registration certificate and number plate. CPR for 231B payment is retained as your credit proof.
8. At year-end, submit the CPR to your tax consultant or enter in IRIS manually to claim the Section 231B credit.

Vehicle Leasing and Advance Tax

Many corporate employees use company lease cars. The tax treatment depends on who registers the vehicle:

• Vehicle registered in company name and given to employee: Company pays 231B at lower corporate rate; employee is taxed on 5% of cost of vehicle as a perquisite each year under salary WHT
• Leasing company (NBFC) registers vehicle for lease: Leasing company pays 231B and generally recovers it via lease pricing
• Employee self-registers leased vehicle: Employee pays 231B as individual; claims as credit in personal return

Frequently Asked Questions