In a bid to increase the registrations of high-end vehicles in the province, the government of Punjab has decided to abolish luxury tax on such vehicles.
According to the report, to avoid paying extra taxes, owners of these high-end vehicles and trucks get their vehicles registered from other provinces i.e. Islamabad, where luxury tax is not implemented.
While talking to the media, the issue was addressed by Provincial Excise and Taxation Minister, Hafiz Mumtaz. He said that the authority will initially slash the tax and will aim to completely eliminate it by May 2019.
This is indeed a much-needed step from the government of Punjab as it was previously charging Rs. 3 to 5 lac from high-end vehicle owners in the form of luxury tax.
Here is the breakdown of luxury tax on vehicles in Pakistan:
|Vehicles||Previous Tax Rate||Current Tax Rate|
|1300 to 1500cc||Rs. 70,000||Rs. 15,000|
|1500 to 2000cc||Rs. 100,000||Rs. 25,000|
|2000 to 2500cc||Rs. 200,000||Rs. 100,000|
|Over 2500cc||Rs. 300,000||Rs. 300,000|
Hafiz further said that once the issue is resolved, it will ultimately see more vehicles being registered in Punjab and help increase the revenues.
Additionally, it remains to be seen whether the Punjab government also abolishes or reduces the price of lifetime token fees or not, which was also increased under their 2018-19 budget for 1000cc cars and motorcycles.
The 1000cc lifetime tokens were increased from Rs. 10,000 to Rs. 15,000 whereas the motorcycle lifetime tokens were increased to Rs. 15,000 from Rs. 12,000.