Web Desk: Punjab province has raised vehicle token taxes after two decades and introduced stricter tax compliance measures under its new finance bill, as authorities seek to broaden the tax base and tighten enforcement across key sectors, officials said.
The provincial government increased token tax rates on commercial and large vehicles above 1,000cc, marking the first major revision in nearly 20 years, according to the finance bill.
Officials said the move is aimed at aligning vehicle taxation with inflation and rising administrative costs, while also improving revenue collection in the transport sector.
Under the new measures, automobile dealers have been designated as withholding agents for tax collection purposes. As a result, showroom operators will now be required to ensure full registration and tax compliance before delivering vehicles to customers.
Furthermore, dealers who hand over unregistered vehicles to buyers will face significant financial penalties, the bill stated.
The finance bill also increased the sales tax rate on a range of services from 5% to 8%.
In addition, hotel services will now be subject to an 8% sales tax when payments are made through credit or debit cards, a move officials say is designed to improve documentation of transactions and reduce tax evasion.
Authorities have also strengthened enforcement provisions for companies violating tax regulations. Under the revised framework, penalties for corporate non-compliance have been set between 500,000 and 1 million rupees.
Meanwhile, businesses that fail to file tax returns for two consecutive months will be removed from the Active Taxpayers List, restricting their ability to operate within formal procurement and financial systems.
Foreign exchange companies and money changers will also face a new 3% tax on services, according to the bill.
Alongside stricter taxation, the government announced targeted relief measures for select sectors.
The “cotton fee” on raw cotton has been abolished to support farmers and reduce input costs in the agriculture sector.
In addition, newly established businesses will be exempt from tax regulations for the first six months of operations, a step officials said is intended to encourage entrepreneurship and formal sector growth.
The province has also removed monthly penalties for late payment of property taxes, while simultaneously tightening enforcement against non-registered traders.
Under the new rules, unregistered businesses will be barred from receiving government contracts, licenses or official approvals.
Officials said penalties for invoice violations under the Punjab Revenue Authority framework have also been significantly increased to improve compliance and reduce under-reporting.
The changes come as Punjab continues efforts to modernize its tax system, increase digital compliance and expand revenue sources amid rising fiscal pressures.
Authorities said the reforms are part of a broader strategy to strengthen financial discipline while balancing enforcement with targeted relief for farmers and new entrepreneurs.
Read more: Salary hikes, housing relief and electric buses drive Punjab’s new budget
