Token tax is the annual vehicle registration fee paid to the provincial excise department in Pakistan. In addition, there is a separate withholding tax on vehicle registration under FBR Section 231B. Filers pay significantly lower rates than non-filers. This guide explains both taxes, rates for 2026, and how to pay online.
Complete guide to token tax (vehicle registration tax) in Pakistan 2026. Token tax rates for cars, bikes, motorcycles. NTN registration from Rs. 2,000.
Two Vehicle Taxes to Understand
Vehicle owners in Pakistan pay two types of tax. First, the provincial token tax (annual registration fee) paid to the Excise and Taxation Department. Second, the federal withholding tax under Section 231B of the Income Tax Ordinance deducted on purchase of new vehicles. Being on the Active Taxpayers List means the lower filer rate applies; non-filers pay a substantially higher amount.
Every Point Where Vehicle Tax Is Collected
| Stage | Tax | Collected by |
|---|---|---|
| First registration of a new car | Advance income tax under section 231B, by engine size or value | Excise department on behalf of FBR |
| Transfer to a new owner | Advance income tax on transfer under section 231B | Excise department |
| Every year | Provincial token tax, plus advance income tax under section 234 for private vehicles | Excise department |
| Leasing a vehicle | Advance tax collected by the leasing company | Bank or leasing company |
The income tax parts of these collections are adjustable against your annual liability if you file a return. The token tax itself is a provincial levy and is not credited against income tax.
Why Filer Status Matters at Each Stage
Both the advance tax at registration and the annual tax with token are charged at higher rates for people not on the Active Taxpayers List. If you are planning to buy a car, file your return first and confirm your name appears on the list before the vehicle is registered.
Paying Token Tax Online
Punjab, Sindh, Khyber Pakhtunkhwa and Islamabad offer online payment through their excise portals or banking apps. Some provinces also offer a lifetime token option for smaller cars, which removes the yearly payment. Keep the e-receipt; traffic police and future buyers may ask for it.
Claiming the Advance Tax in Your Return
The excise receipt shows the income tax part separately from token tax. Enter that amount as tax collected in your return. Many vehicle owners never claim it and lose a credit every year.
Frequently Asked Questions
Can I claim the tax paid with my car's token in my income tax return?
The advance income tax collected under section 234 with the token can be claimed as a credit. The provincial token tax itself cannot.
Does filer status affect vehicle registration tax?
Yes. Advance tax at registration and with the annual token is higher for people not on the Active Taxpayers List.
What is token tax in Pakistan?
Token tax is the annual provincial vehicle registration fee paid to the Excise and Taxation Department. It is separate from the federal Section 231B withholding tax paid on vehicle purchase. Both must be paid but they are different taxes paid to different authorities.
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