The Punjab government has proposed wide-ranging fiscal reforms in its Finance Bill 2026-27, aiming to increase provincial revenue, expand the tax base and improve documentation across multiple sectors. The proposed measures include higher taxes on vehicles, revisions to service taxes, changes in property taxation and new incentives designed to support electric vehicles, businesses and agriculture.
One of the most significant proposals is an increase in vehicle token tax for cars above 1,000cc, along with higher rates for commercial vehicles and trucks. The revision would mark the first major adjustment in nearly two decades. In contrast, the government has proposed a 99% concession in token tax for electric vehicles to encourage cleaner transportation and accelerate the adoption of environmentally friendly technology.
The bill also recommends increasing motor vehicle transfer fees and aligning Hire Purchase Agreement charges with standard transfer fees. Additionally, vehicle dealers may be authorized to act as registration agents, allowing registration at the point of sale. Authorities also plan stricter enforcement measures against unregistered vehicles to improve compliance and strengthen record-keeping.
Meanwhile, the government has proposed raising sales tax on hotel payments made through credit cards, debit cards and digital channels to 8%. Several services currently taxed at 5% may also face an increase to 8%, while a new 3% tax has been proposed on services provided by foreign exchange companies and money changers as part of broader tax reforms.
Property taxation is also set for changes, with mandatory payments through the e-pay system and quarterly collection of surcharges on delayed payments. Property owners using the self-assessment system would receive a 5% concession. Furthermore, new businesses may be exempted from certain tax laws for their first six months, while unregistered traders could face restrictions on obtaining government contracts, licences and no-objection certificates.
The agriculture sector has been included through a combination of relief measures and higher taxes. The proposed bill seeks to abolish the cotton fee on raw cotton to support growers, particularly in south Punjab. At the same time, agricultural income tax and irrigation charges are set to increase for larger landholdings and orchards. If approved, the reforms will affect vehicle owners, businesses, farmers, service providers and property taxpayers across the province.