Motor vehicle owners in Pakistan must understand motor vehicle tax and advance tax obligations for tax year 2026 to avoid penalties and compliance issues. The Income Tax Ordinance, 2001, updated for Tax Year 2026, lays down these rules under Section 234, which governs the collection of advance tax along with motor vehicle tax.
This guide explains who pays, how much is payable, vehicle-wise tax rates, and important exemptions—all in simple terms.
What Is Section 234 of the Income Tax Ordinance?
Under Section 234, any authority collecting motor vehicle tax is also required to collect advance adjustable income tax at the same time.
Key Legal Highlights:
• Advance tax is collected along with motor vehicle tax
• Tax may be paid annually, in installments, or lump sum
• Advance tax collected is adjustable against final income tax liability
Vehicles Exempt After a Certain Period
To provide relief, the law exempts older vehicles from advance tax after a defined time:
🚗 Motor Cars
• No advance tax after 10 years of use in Pakistan
🚌 Passenger Transport Vehicles
• Seating capacity 10 or more
• Exempt after 10 years, counted from July 1 of the year of manufacture
🚚 Goods Transport Vehicles
• Laden weight below 8,120 kg
• Exempt after 10 years from first registration
Tax Rates on Goods Transport Vehicles (2026)
📦 Annual Tax Based on Laden Weight
• Rs. 2.50 per kg of laden weight
📦 Vehicles Above 8,120 kg (After 10 Years)
• Rs. 1,200 per annum
Passenger Transport Vehicles (Plying for Hire)
🚌 Per-Seat Annual Tax Rates
| Seating Capacity | Non-AC (Rs/Seat) | AC (Rs/Seat) |
| 4 to <10 persons | 200 | 375 |
| 10 to <20 persons | 500 | 750 |
| 20 or more | 1,000 | 1,500 |
Tax Rates for Private & Other Motor Vehicles (Annual)
| Engine Capacity | Annual Tax |
| Up to 1000cc | Rs. 800 |
| 1001–1199cc | Rs. 1,500 |
| 1200–1299cc | Rs. 1,750 |
| 1300–1499cc | Rs. 2,500 |
| 1500–1599cc | Rs. 3,750 |
| 1600–1999cc | Rs. 4,500 |
| 2000cc & above | Rs. 10,000 |
Lump-Sum Motor Vehicle Tax Option (2026)
Vehicle owners may opt to pay tax in lump sum instead of annually.
💰 Lump-Sum Tax Rates
| Engine Capacity | Lump-Sum Tax |
| Up to 1000cc | Rs. 10,000 |
| 1001–1199cc | Rs. 18,000 |
| 1200–1299cc | Rs. 20,000 |
| 1300–1499cc | Rs. 30,000 |
| 1500–1599cc | Rs. 45,000 |
| 1600–1999cc | Rs. 60,000 |
| 2000cc & above | Rs. 120,000 |
Is Advance Tax Adjustable?
✅ Yes.
All advance tax collected under Section 234 is adjustable against your final income tax liability when filing your return.
Vehicles Covered Under Section 234
The definition of “motor vehicle” under Section 234 follows Section 231B, and includes:
• Cars
• Jeeps
• SUVs
• Vans
• Wagons
• Trucks
(excluding motorcycles up to 200cc and certain public transport/agricultural vehicles)
Why This Matters for Tax Year 2026
Failing to pay motor vehicle tax and advance tax can result in:
• Penalties
• Vehicle registration issues
• Problems during token renewal
• Compliance notices from FBR
✅ Pro Tips for Vehicle Owners
• Keep your vehicle age record updated
• Check eligibility for 10-year exemptions
• Prefer ATL status to avoid additional tax exposure
• Retain tax payment receipts for return filing
Disclaimer: This article is published for general informational and educational purposes only. It does not constitute legal, tax, or financial advice. Tax laws, rates, and interpretations may change or vary based on individual circumstances. Readers are advised to consult the Federal Board of Revenue (FBR), relevant provincial authorities, or a qualified tax professional before making any tax-related decisions.