Motorists in Islamabad could face a significant increase in annual token tax as part of the proposed Budget 2026–27, according to early reports. The revised structure is expected to make vehicle ownership more expensive across multiple categories.
Under the proposed changes, cars with engine capacities of up to 1000cc may be subject to a fixed token tax of up to Rs. 20,000, marking a substantial increase compared to existing rates. For mid-range vehicles, authorities are reportedly considering a tax of 0.25% of the vehicle’s invoice value, while larger and luxury vehicles above 2000cc could face rates of up to 0.35%.
The new taxation plan also includes adjustments for commercial vehicles and motor cabs, with rates varying depending on engine size and usage category. Officials indicate that the revised system is designed to broaden the tax base and improve revenue collection from the transport sector.
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If implemented, the changes would directly impact thousands of private vehicle owners in the federal capital, particularly middle-income families who rely on small and mid-sized cars for daily commuting. Transport operators may also experience increased operational costs, which could potentially be passed on to consumers through higher fares.
The proposed reforms are part of broader fiscal measures being discussed ahead of the federal budget announcement. While the government has not officially confirmed the final rates, the suggested adjustments have already sparked concern among motorists and industry stakeholders.
Analysts say the final decision will determine whether the changes are implemented in full or revised further before approval in the upcoming budget cycle.
