The Federal Cabinet has approved revisions to token tax rates for vehicles in Islamabad after a gap of six years. The decision is expected to enhance revenue collection and bring Islamabad’s tax framework in line with provincial practices.
The Cabinet recently cleared a summary submitted by the Ministry of Interior and Narcotics Control, which proposed amendments to the long-standing West Pakistan Motor Vehicles Taxation Act, 1958. The new plan updates token tax rates currently applicable to private, public service, and commercial vehicles in the capital.
The Excise and Taxation Department, Islamabad Capital Territory (ICT), which manages vehicle registration, transfer, and tax collection, had highlighted that token tax rates had remained unchanged since 2019. This stagnation restricted the department’s ability to meet revenue targets effectively.
In FY 2024-25, the Excise Department collected Rs4.29 billion in revenue, with a target of Rs4.5 billion set under the 2025 Finance Bill. Cabinet members were briefed that outdated token tax rates were not only limiting revenue but also making Islamabad’s tax system inconsistent with provincial counterparts.
The approved increase in token tax is aimed at ensuring parity across regions and improving efficiency in tax administration. The move is expected to provide a significant boost to revenue collection in the coming fiscal year.