LAHORE: Punjab Finance Bill 2026 proposes major adjustments across key sectors to boost collections while avoiding new levies.
Commercial loader vehicle taxes are set to nearly triple.
Smaller loaders (4,060kg–8,120kg) will jump from Rs2,200 to Rs6,600. Mid-range (8,120kg–12,000kg) rise from Rs4,000 to Rs12,000. Larger ones (12,000kg–16,000kg) move from Rs6,000 to Rs18,000, and heaviest vehicles exceed 16,000kg from Rs8,000 to Rs24,000.
This change will significantly affect the transport industry.
Businesses relying on heavy vehicles for goods movement may pass costs to consumers. Logistics costs could climb, influencing supply chains across Punjab.
Engine capacity taxes see mixed revisions. Vehicles 1,000cc–2,000cc drop to 0.1% of invoice value from 0.2%. Larger engines above 2,000cc increase to 0.4% from 0.3%. This targets luxury vehicles while easing smaller car owners.
Water charges shift to a flat-rate system. Kharif season: Rs1,650 per acre. Rabi: Rs850 per acre. Orchards with approved irrigation add Rs2,000 yearly. Lift irrigation users pay Rs2,250 per acre annually.
Agriculture income tax simplifies with a flat Rs1,000 per acre for holdings over 12.5 acres. Previously slab-based: Rs300 (12.5–25 acres), Rs400 (25–50), Rs500 (above 50). Irrigated orchards rise from Rs600 to Rs1,000 per acre; non-irrigated from Rs300 to Rs500.
These measures aim to modernize revenue from farming while addressing water scarcity challenges in the province.
Property tax payments now mandate electronic channels only, ending manual options. Late payment surcharges shift to quarterly calculations with new deadlines: September 30, December 31, March 31, and June 30.
Cotton sector receives relief as the seasonal cotton fee is abolished under the Punjab Finance Act 1973. This supports struggling ginning units amid declining production.
Sales Tax on Services Overhaul
Punjab Sales Tax on Services Act sees tightening. “Active taxpayer” definition excludes suspended, blacklisted, or late filers. Input tax on capital goods now spreads over 12 monthly instalments. Claims from non-active sellers get rejected.
A risk-based system allows the Punjab Revenue Authority to flag suspicious claims for delays, partial rejection, audits, or further scrutiny, with appeal rights.
Penalties escalate sharply: up to Rs100,000 for individuals, Rs500,000 for companies on violations.
Restaurants face dual rates: 8% for digital payments (cards, wallets, QR), 16% otherwise. Reduced rate services (IT, transport, professional) rise from 5% to 8%. New entries include foreign exchange at 3% and event management at 8%, both without input adjustments.
Motor vehicle dealers become withholding agents. They must ensure registration, dues payment, and standard plates before handover. Violations attract full penalty equal to dues. This curbs unregistered vehicles and improves compliance.039185
Experts view these steps as pragmatic for revenue without new burdens, though businesses may feel the pinch. The budget balances relief with enforcement for fiscal targets.