The Punjab government has proposed increases in agricultural tax, water cess, and token tax on private cars above 1,000cc and commercial vehicles as part of the Punjab Finance Bill 2026. Finance Minister Mujtaba Shujaur Rehman presented the bill in the Punjab Assembly on Tuesday alongside the provincial budget for 2026-27.
Agricultural Tax Revisions
Under the proposed amendments, no tax will be levied on agricultural land up to 12.5 acres. For land between 12.5 and 25 acres, the per-acre tax rises from Rs300 to Rs1,000. Land exceeding 25 acres up to 50 acres sees an increase from Rs400 to Rs1,000 per acre. For land over 50 acres, the rate goes from Rs500 to Rs1,000 per acre. Orchards face increased taxes: matured orchards from Rs600 to Rs1,000 per acre, and unirrigated orchards from Rs300 to Rs500 per acre.
Water Cess and Token Tax Changes
The government shifts water cess to a flat-rate system: Rs1,650 per acre for Kharif and Rs850 per acre for Rabi seasons. Token tax on cars with engine capacities between 1,000cc and 2,000cc rises from 0.2% to 0.3% of invoice value. For cars above 2,000cc, the rate increases from 0.3% to 0.4%. Commercial vehicle token taxes, unchanged for over two decades, are substantially revised: delivery vans and mini-trucks (laden weight 4,060-8,120 kg) from Rs2,200 to Rs6,600; six-wheeler trucks (8,120-12,000 kg) from Rs4,000 to Rs12,000; vehicles with long trailers from Rs6,000 to Rs18,000; and heavy trailers (over 16,000 kg) from Rs8,000 to Rs24,000.
Relief Measures and Reforms
The bill proposes a 99% exemption on token tax for electric vehicles for 2026-27. Electronic payment of urban immovable property tax becomes mandatory province-wide, replacing manual channels. The surcharge on delayed property tax payments shifts from monthly to quarterly, reducing taxpayer burden. The cotton fee on raw cotton arrival at ginning factories is abolished to support the struggling cotton industry, which has seen many closures in South Punjab.
Motor vehicle dealers will be designated as agents of the Excise, Taxation and Narcotics Control Department for vehicle registration at the point of sale, aiming to accelerate registration and curb unregistered vehicles. The transfer fee on motor vehicles increases by up to 50% of the current rate, shelving the previous 10% annual increase plan.
The government states these amendments align the provincial tax structure with economic realities, strengthen enforcement, and improve compliance and transparency. The Punjab Finance Bill 2026 is part of the broader fiscal strategy and awaits assembly approval.
