Finance Act, 2026: New Islamabad Token Tax Rates Take Effect from July 1

Private vehicles up to 1,000cc to pay Rs20,000 lifetime token tax, while larger vehicles face annual levy based on invoice value from July 1, 2026.

ISLAMABAD: The federal government has introduced revised token tax rates for vehicles registered in the Islamabad Capital Territory (ICT) through the Finance Act, 2026, with the new taxation structure coming into effect from July 1, 2026.

The amendments have been made to the West Pakistan Motor Vehicles Taxation Act, 1958 (WP Act XXXII of 1958), replacing the existing Tables 2, 3, 4 and 5 of the Schedule applicable in the Islamabad Capital Territory.

Under the revised framework, private motor vehicles with engine capacity of up to 1,000cc will now be subject to a one-time lifetime token tax of Rs20,000, while vehicles above 1,000cc will pay annual token tax based on a percentage of the vehicle’s invoice value.

The Finance Act also revises annual token tax rates for motor cabs, public service vehicles and commercial/loading vehicles operating within Islamabad.

Token Tax Rates for Private Motor Vehicles (ICT)

S.No	Engine Capacity	New Tax Rate
1	Up to 1000cc	Rs20,000 (Lifetime)
2	1001cc – 1300cc	0.25% of invoice value per annum
3	1301cc – 1500cc	0.25% of invoice value per annum
4	1501cc – 2000cc	0.25% of invoice value per annum
5	2001cc – 2500cc	0.35% of invoice value per annum
6	Above 2500cc	0.35% of invoice value per annum

Annual Token Tax for Motor Cabs

S.No	Engine Capacity	Annual Tax (Rs)
1	Up to 1000cc	600
2	Above 1000cc to 1300cc	1,000
3	Above 1300cc to 1500cc	1,700
4	Above 1500cc to 2000cc	2,500
5	Above 2000cc to 2500cc	3,400
6	Above 2500cc	4,200

Public Service Vehicles (Per Seat Per Year)

S.No	Vehicle Category	Tax (Rs)
1	8-seater	350
2	13-seater	400
3	15-seater	500
4	16-seater	600
5	42-seater	700
6	52-seater	850

Commercial and Loading Vehicles

S.No	Vehicle Category	Annual Tax (Rs)
1	Laden weight up to 1,250kg	500
2	Above 1,250kg to 2,030kg	1,000
3	Above 2,030kg to 4,060kg	1,000
4	Above 4,060kg to 6,090kg	6,600
5	Above 6,090kg to 8,120kg	6,600
6	Above 8,120kg	12,000
7	Above 8,120kg to 12,000kg	12,000
8	Long trailers/vehicles above 12,000kg to 16,000kg	18,000
9	Long trailers/vehicles above 16,000kg	24,000
10	Tractor (with trolley)	2,600
11	Tractor (without trolley)	2,600

The revised token tax regime forms part of the government’s fiscal measures under the Finance Act, 2026 aimed at modernising the taxation framework for motor vehicles in the Islamabad Capital Territory. The new rates are applicable from July 1, 2026, and vehicle owners will be required to pay token tax in accordance with the updated schedule prescribed under the amended law.