How much income tax do van, wagon, coaster and bus owners pay per seat with their token?

What does the law say?

Section 234 of the Income Tax Ordinance, 2001 requires the person collecting motor vehicle tax to collect advance income tax at the same time, at the rates in Division III of Part IV of the First Schedule. Clause (2) of Division III covers “passenger transport vehicles plying for hire” and sets these rates, in rupees per seat per annum. They are the rates in the text amended to 30 June 2026 and apply in tax year 2027:

Registered seating capacity	Non air-conditioned (Rs. per seat per annum)	Air-conditioned (Rs. per seat per annum)
4 or more persons but less than 10	200	375
10 or more persons but less than 20	500	750
20 persons or more	1,000	1,500

Section 234(3) adds a time limit: for a passenger transport vehicle with registered seating capacity of ten or more persons, advance tax is not collected “after a period of ten years from the first day of July of the year of make of the vehicle”.

How does it work in practice?

The owner multiplies the registered seats by the rate for the vehicle’s band and air-conditioning status. The whole vehicle falls into one band based on its total capacity; the table does not charge the first nine seats at one rate and the rest at another.

The tax is paid through the Excise and Taxation office along with the token. Under section 234(2), if the motor vehicle tax is paid in instalments or as a lump sum, the advance tax may be collected the same way. The token itself, and how the province schedules it, are provincial matters outside this corpus.

Section 234(5) makes the tax adjustable. The owner can claim it as a credit in the income tax return rather than treating it as the last word on the tax due on fares.

Worked example (illustrative figures)

Shahid runs a Rawalpindi to Murree service and is on the Active Taxpayers’ List. The vehicles and years are invented; the rates are from clause (2).

1. Air-conditioned coaster, 26 registered seats, made in 2020. Band: 20 persons or more, air-conditioned. 26 x Rs. 1,500 = Rs. 39,000 per annum.
2. Non air-conditioned wagon, 14 registered seats, made in 2019. Band: 10 or more but less than 20, non air-conditioned. 14 x Rs. 500 = Rs. 7,000 per annum.
3. Air-conditioned van, 7 registered seats, plying for hire. Band: 4 or more but less than 10, air-conditioned. 7 x Rs. 375 = Rs. 2,625 per annum.

Total for the year: Rs. 39,000 + Rs. 7,000 + Rs. 2,625 = Rs. 48,625.

If Shahid also ran a 30-seat bus made in 2015, section 234(3) would stop collection ten years from 1 July 2015, that is from 1 July 2025. No advance tax would be collected on that bus in tax year 2027.

What if the owner is not on the Active Taxpayers’ List?

Section 100BA sends collection from persons not on the Active Taxpayers’ List to the Tenth Schedule. Rule 1 increases the rate “by hundred percent”. Rule 10, clause (ha) excluded section 234 tax on goods and passenger transport vehicles, but only for the period from the Tax Laws (Second Amendment) Ordinance, 2022 to 30 June 2023. On the text, that exclusion has run out, so the doubled rate appears to apply now: the 26-seat coaster above would carry Rs. 78,000 instead of Rs. 39,000.

What if the van has fewer than ten seats and is old?

The ten-year limit in section 234(3) applies only to vehicles of ten or more seats. Section 234(2A) separately stops advance tax on “motor cars used for more than ten years in Pakistan”. The Ordinance does not say whether a van or car with fewer than ten seats plying for hire counts as a “motor car” for that rule, so the text leaves this point open.

Common mistakes

• Using the older, higher rates. Before the Tax Laws (Second Amendment) Ordinance, 2022, the table ran from Rs. 500 to Rs. 2,500 per seat non air-conditioned and Rs. 1,000 to Rs. 4,000 air-conditioned. That Ordinance substituted the lower table shown above, and the Tax Laws (Amendment) Act, 2023 enacted the same substitution.
• Counting ten years from registration. For passenger vehicles of ten or more seats, section 234(3) counts from 1 July of the year of make. It is goods vehicles under 8,120 kg that count from first registration.
• Relying on old reduced rates. A Second Schedule clause that once cut the rate to Rs. 250 per seat was omitted by the Finance Act, 2015.
• Assuming vehicles under four seats are covered by the table. The first band starts at 4 persons. The table does not deal with smaller capacities.

What to check in the official text

Read section 234(1) to (5) and clause (2) of Division III of Part IV of the First Schedule in the official PDF, since our site copy of the Ordinance does not reproduce the schedule tables. The Ordinance does not define “air conditioned” for this table. If the owner is not on the Active Taxpayers’ List, read rules 1 and 10 of the Tenth Schedule.