Uniform road tax across different Indian states soon

Tuesday 11 June 2013, 11:35 AM by

If the central government's decision to levy a fixed uniform lifetime road tax on all motor vehicles goes through, buying a luxury car could become more affordable in the near future. As per reports, the state governments have reached an accord towards fixing a uniform road tax at six per cent on sale price of both cars and two-wheelers, excluding the Value Added Tax (VAT). This imminent decision is aimed at encouraging domestic buyers to purchase vehicles from their home states and not from those, where the one time road tax is comparatively lower than the home state.

At present, the one time road tax on purchasing a new vehicle varies in different Indian states. Further, the tax ranges between 4 and 6 per cent, in case a vehicle (two-wheeler or four-wheeler) costs less than Rs. 4 lakh. The motor vehicles with retail values above Rs. 20 lakh attract road tax in a 7 to 9 per cent bracket, depending upon the segment. Therefore, if the central government standardises the one time road tax, buying a luxury vehicle would become a little easier on the pockets, besides ensuring higher savings.

Expressing his views on the uniform pan-Indian road tax, a Haryana transport officer was quoted as saying, “Keeping the uniform rate of tax at 6 per cent would mean big relief for buyers of expensive vehicles. Now people are going for bigger cars and this will push their sales.” He further added, “There will be dip in tax collection from big cars, but it would be compensated by increased collection from two-wheelers.”

The standardisation in road tax would mean that buyers can buy vehicles from their home states, instead of going to neighbouring states to enjoy lower tax. Speaking his mind on the same, a senior road ministry official was quoted as saying, “Once these proposals get the minister's nod, we will place them before the Transport Development Council (TDC) for approval. Then, it will be notified.”

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