LAHORE, (APP – UrduPoint / Pakistan Point News – 17th Jun, 2026) The Punjab government has proposed a series of tax reforms and revenue measures in the Finance Bill 2026-27 aimed at broadening the tax base, improving compliance, enhancing transparency and aligning the provincial tax regime with current economic realities.
According to budget documents, the government has proposed a revision in token tax rates for vehicles above 1000cc after more than two decades, while rates for commercial vehicles, including trucks and delivery vans, have also been rationalized to strengthen provincial revenues.
To improve transparency, efficiency and taxpayer convenience, payment of property tax through the e-Pay system has been proposed to be made mandatory. The government has also proposed replacing the existing monthly surcharge on delayed property tax payments with a quarterly surcharge mechanism. In a relief measure for the agriculture sector, the levy imposed on cotton under the Punjab Finance Act 1973 is proposed to be abolished to support farmers and revive cotton production, particularly in South Punjab, where several ginning factories have closed in recent years.
The Punjab government has also proposed amendments to the Punjab Sales Tax Act 2012 to broaden the revenue base, ensure greater equity and efficiency in taxation, rationalize tax rates and strengthen tax administration. The proposed changes include administrative reforms aimed at simplifying compliance procedures, enhancing transparency and improving enforcement of tax laws.
Under proposed amendments to the Punjab Motor Vehicle Transaction Licensees Act 2015, motor vehicle dealers will be designated as agents of the Excise, Taxation and Narcotics Control Department for on-site registration of vehicles at the point of sale.
The measure is expected to expedite registration, discourage the use of unregistered vehicles and contribute to improved law and order.
The government has also proposed revisions in agricultural income tax rates based on land holdings. Under the revised structure, holdings up to 12.5 acres will remain exempt, while tax rates for larger holdings will increase to Rs 1,000 per acre. For mature orchards, the proposed tax rate is Rs 1,000 per acre for irrigated orchards and Rs 500 per acre for unirrigated orchards.
In the Excise, Taxation and Narcotics Control sector, motor vehicle transfer fees are proposed to be increased, while fees on hire purchase agreements have been aligned with transfer fees, except for motorcycles and motor cars below 1000cc. The government has also proposed a 99 percent concession in token tax for electric vehicles during fiscal year 2026-27 to promote environmentally friendly transportation.
For property tax reforms, a 20 percent cap on capital value-based assessments has been proposed for existing taxpayers assessed before January 1, 2025. In addition, properties assessed under the self-assessment scheme will receive a five percent discount on property tax payments.
The Irrigation Department has proposed revised flat water rates (Aabiana), with rates set at Rs 1,650 per acre for Kharif crops and Rs 850 per acre for Rabi crops. Additional annual water charges of Rs 2,000 per acre for approved orchards and Rs 2,250 per acre for state-owned lift irrigation schemes have also been proposed.
The government expressed confidence that the proposed measures would strengthen provincial revenues, improve tax compliance, facilitate taxpayers and support economic growth while ensuring a more efficient and transparent taxation system.
