Does the income tax collected with my token ever stop, for example after ten years?

The advance income tax collected with a vehicle’s token does not run forever. Section 234 of the Income Tax Ordinance, 2001, as amended to 30 June 2026, sets three separate ten-year limits, each counted from a different date, and one reduced amount for heavy goods vehicles. The rules below apply to tokens paid in tax year 2027 (1 July 2026 to 30 June 2027).

What does the law say?

Section 234 has three time limits:

• Section 234(2A), motor cars. “In respect of motor cars used for more than ten years in Pakistan, no advance tax shall be collected after a period of ten years.”
• Section 234(3), passenger transport vehicles. For a passenger transport vehicle with registered seating capacity of ten or more persons, advance tax is not collected after ten years “from the first day of July of the year of make of the vehicle”.
• Section 234(4), lighter goods vehicles. For a goods transport vehicle with registered laden weight of less than 8,120 kilograms, advance tax “shall not be collected after a period of ten years from the date of first registration of vehicle in Pakistan.”

Heavier goods vehicles are handled in the rate schedule instead. Clause (1A) of Division III says that for goods transport vehicles with laden weight of 8,120 kilograms or more, advance tax after ten years from first registration “shall be collected at the rate of twelve hundred rupees per annum”.

How does it work in practice?

Vehicle	Rate before the limit (Division III)	Ten years counted from	After ten years
Motor car	Clause (3): Rs. 800 to Rs. 10,000 a year by engine capacity	Not stated in section 234(2A)	Not collected
Passenger vehicle, 10 or more seats	Clause (2): Rs. 500 to Rs. 1,500 per seat per annum	1 July of the year of make	Not collected
Goods vehicle under 8,120 kg	Clause (1): Rs. 2.50 per kg of laden weight	Date of first registration in Pakistan	Not collected
Goods vehicle 8,120 kg or more	Clause (1): Rs. 2.50 per kg of laden weight	Date of first registration in Pakistan	Rs. 1,200 per annum

Clause (1) of Division III states the goods vehicle amount as two rupees and fifty paisa per kilogram of laden weight without naming a period.

Worked example (illustrative figures)

Case 1: coaster. Tariq runs a 26-seat air-conditioned coaster between Sialkot and Lahore. Its year of make is 2015.

1. Clause (2), row 20 persons or more, air conditioned: Rs. 1,500 per seat per annum.
2. Before the limit: 26 x Rs. 1,500 = Rs. 39,000 a year.
3. Ten years from 1 July 2015 ends on 1 July 2025.
4. Token paid in October 2026: section 234(3) applies, so no advance tax.

Case 2: heavy truck. Imran owns a truck with registered laden weight of 12,000 kg, first registered in March 2014.

1. Clause (1): 12,000 x Rs. 2.50 = Rs. 30,000 before the ten-year point.
2. Ten years from first registration ended in March 2024.
3. From then on, clause (1A) applies: Rs. 1,200 per annum.

Case 3: lighter truck. A pickup-based goods vehicle with registered laden weight of 3,000 kg, first registered in 2012, is more than ten years past first registration. Section 234(4) applies, so no advance tax is collected.

What if my car is just over ten years old?

Section 234(2A) does not say whether the ten years run from manufacture, import, first registration or first use in Pakistan. It says “used for more than ten years in Pakistan”, unlike sub-sections (3) and (4), which each name a starting date. The Ordinance does not resolve this, so the starting date for a car is not settled by section 234 alone.

What about vans and passenger vehicles with fewer than ten seats?

Section 234(3) covers passenger vehicles of ten or more seats only. Clause (2) of Division III also taxes passenger vehicles plying for hire with 4 to 9 seats, at Rs. 200 non air conditioned or Rs. 375 air conditioned per seat per annum. Section 234 gives no separate time limit for those vehicles. Whether section 234(2A) covers one depends on whether it is a “motor car”, a term the section does not define. The same question arises for jeeps and sports utility vehicles taxed under clause (3).

Common mistakes

• Assuming every vehicle stops at ten years. Goods vehicles of 8,120 kg or more keep paying Rs. 1,200 a year under clause (1A).
• Counting a bus from its registration date. Section 234(3) counts from 1 July of the year of make.
• Mixing up the token and transfer limits. The five-year limit in section 231B applies to transfer tax, not to the section 234 token tax.

What to check in the official text

Read section 234(2A), (3) and (4), and clauses (1), (1A), (2) and (3) of Division III of Part IV of the First Schedule. Check the registration book for the year of make, date of first registration, seating capacity and registered laden weight, since each limit turns on one of these. Provincial motor vehicle tax, which may continue after the federal advance tax stops, is outside this corpus.