Must Knows

All about road tax in India

[ecis2016.org] Since road tax is a state tax, laws and protocols are different in each state.

Any person who buys a car is required to pay a mandatory fee known as road tax. The road tax is a statewide tax, which means that the government of each state is responsible for imposing it at its own level. The laws and protocols regarding road tax are different in each state. The total amount of tax varies from state to state due to the fact that the proportion of tax collected by each state is different. The Central Motor Vehicles Act mandates that if a vehicle is kept for more than a year, the full amount of road tax must be paid upfront.

Who imposes road tax?

Road tax is imposed on all two-wheelers, four-wheelers, and other kinds of transportation, regardless of whether they are driven for personal or professional reasons. The person or entity that levies the road tax is:

  • The annual or lifetime tax on motor vehicles, the tax on passengers and commodities, the state value-added tax, and the tax on tolls are all levied by the state government.
  • The Customs and Excise Department of the Central Government is responsible for collecting import taxes, central excise tax, central sales tax, GST, and any other applicable supplementary surcharge depending on the make and model of the automobile.

Why is road tax levied at the state level?

About 80% of India’s roads are built and maintained by state governments, with the exception of the nation’s expressways, which are the responsibility of the government of India. Because each state handles the expense of constructing these highways, the road tax is levied by the state government.

Who is required to pay road tax?

When someone buys a vehicle, they are responsible for paying road tax, which is calculated using the “ex-showroom price” of the motor. The following factors are taken into consideration when determining the amount of road tax due:

  • The vehicle’s seating capacity
  • The vehicle’s engine capacity
  • The age of the motor
  • The vehicle’s overall weight

When is road tax payable?

The consumer is obliged to make a payment for road tax when they register their vehicles. The settlement of the road tax may be done either yearly or all at once, depending on the numerous criteria that are required by the various state governments.  

Re-registration and payment of the road tax are necessary if you move to a new state after purchasing a vehicle and paying lifetime road tax in your current state and then desire to use that car in a new state. It is not necessary to pay additional road tax if you are simply travelling to another state.

Where is the road tax payable?

Motorists should go to their nearest Regional Transport Office (RTO) to pay their Road Tax.

Methods for paying Road Tax

  • Offline method

The first instalment of a vehicle’s road tax is typically paid for by either the showroom where it was purchased or the automotive dealer. Vehicle owners must approach an RTO near their location, complete the road tax form, and submit the tax amount in cash or demand draft after their initial payment expires.

Documents required to pay road tax include the vehicle’s registration and insurance paperwork, proof of residence and a purchase invoice.

  • Online method

People have the option of paying their road tax digitally by going to the homepage of the Transport Department of the state in which they purchased their vehicle. A vehicle’s owner must provide the Registration Number as well as the Chassis number before submitting the information in order to pay the road tax over the Internet. The next thing that they have to do is pick the method of payment for the tax, and then finish the process of making the payment.

Ways to reclaim your road tax

An automobile owner who wishes to get rid of a vehicle that is not older than 15 years must first approach the RTO in the state in which the automotive was listed in order to have the registration for that vehicle revoked. If the automobile has been moved from one jurisdiction to another, however, the refund may only be obtained by going to the RTO in the state where the original registration was completed. At the RTO, you will need to provide an indelible mark of the chassis/engine identification in addition to the requisite paperwork in order to cancel the registration.

Regulations and guidelines for some Indian states

  • Karnataka 

The Karnataka Motor Vehicles Law from 1989 serves as the foundation for the laws and regulations governing road tax in Karnataka. The following is a compilation of the most significant details pertaining to the guidelines and regulations that govern the road tax in Karnataka.

Tax percentage 

The following is a breakdown of the tax percentages applicable to private and non-commercial vehicles:

  • Two Wheeler 
Age of the Automotive 2-wheelers priced below Rs.50,000 2-wheelers priced between Rs. 50,000 and Rs. 1 lakh Motorcycles above Rs.1 lakh Electric vehicles (2-wheelers)
Fresh Vehicles 10 per cent of the vehicle’s cost 12 per cent of the cost of the vehicle 18 per cent of the cost of the vehicle 4 per cent of the cost of the vehicle
Not exceeding five years 75% 75% 75% 75%
Greater than 15 years 25% 25% 25% 25%
  • Four Wheeler 
Age of the Automotive Vehicles under Rs.5 lakh Vehicles priced between Rs. 5 lakh and Rs. 10 lakh Vehicles priced between Rs. 10 lakh and Rs. 20 lakh Four-wheelers costing more than Rs. 20 lakh Electric Vehicle (4-wheelers)
Fresh 13 per cent of the cost of the vehicle. 14 per cent of the cost of the vehicle 17 per cent of the vehicle’s cost 18 per cent of the cost of the vehicle None
Greater than four years although less than five 75% 75% 75% 75% 75%
Over fifteen years 25% 25% 25% 25% 25%

Tax payable forever

Vehicle proprietors whose automobiles have been operated in Karnataka several years but have number plates from other states are legally obliged to pay the lifelong tax more than once. The tax exemption only applies to automobiles from outside the state that have been registered and used in Karnataka for a period of less than a year.

Tax imposed

The government of the state of Karnataka imposes a road tax on all motor vehicles, including two-wheelers, three-wheelers, and four-wheelers, that are intended for use on public roadways. On the web page of the state department of transportation, each of the tariffs that are applicable to these kinds of cars in the various parts of the commercial vehicle taxation schedule is listed.

Payment of tax

The person who owns the vehicle has the option of prepaying the tax that is imposed by Section 3, whether on a quarterly, half-yearly, or annual basis, as long as the payment is made within 15 days of the selected period. It is possible for the individual who is now in the ownership of the car or the individual who is the actual owner to make the payment.

Taxation card

After the tax imposed in section 3 has been paid by a vehicle owner, the taxation authority will provide the following to the individual paying the tax:

  • A receipt that includes an indication of the total amount of tax that was paid.
  • A taxation card noting the tax rate that was imposed and the time frame for which the individual has paid the road tax

No one is allowed to operate the vehicle unless the vehicle’s actual proprietor or the individual who is actually in control of the vehicle and has proof that the road tax has already been paid as required by section 3 has a taxation card as required by subsection 1. In addition, a motor vehicle that has an outstanding balance on its road tax or for which a taxation card has still not been issued is not permitted to be driven on any public road or other public space.

  • Delhi 

The Delhi Motor Vehicle Taxation Act, which was passed in 1962, serves as the legal foundation for the city’s road tax laws and regulations. The following is a list of some crucial information pertaining to the laws and regulations of road tax for the city of Delhi.

Tax percentage 

  • Two Wheeler 
Motorcycles up to Rs.25,000 Motorcycles priced between Rs.25,000 and Rs.40,000 Two-wheelers priced between Rs.40,000 and Rs.60,000 Motorcycles over Rs.60,000
2 per cent of the cost of the vehicle 4 per cent of the cost of the vehicle 6 per cent of the cost of the vehicle 8 per cent of the cost of the vehicle
  • Four Wheeler 
Vehicles up to Rs. 6 lakh Vehicles priced between Rs. 6 lakh and Rs. 10 lakh Vehicles costing above Rs.10 lakh
4 per cent of the cost of the vehicle 7 percent of the cost of the vehicle 10 per cent of the cost of the vehicle

Tax payable forever

The road tax is only required to be paid once for personal or non-commercial units. On the other hand, the road tax may be paid on a monthly, annually, or semi-annual basis for passenger and commercial vehicles.

Tax imposed

In accordance with the Delhi Motor Vehicle Taxation Act, the road tax must be paid for all vehicles, commercial or otherwise, that are maintained or utilised within the city limits of Delhi. The following considerations are taken into account while determining the amount of the road tax:

  • In the event that the registration of the automobile takes place in Delhi, the owner will be required to make a one-time payment that is determined by the category and price of the vehicle.
  • If the automobile is recognised in any jurisdiction apart from Delhi, therefore, a one-time tax will be assessed, and the value of that tax will be reduced by one-tenth of the level of tax that has been paid annually after the automobile was listed in that other jurisdiction.

The proprietor of a vehicle that is more than ten years old has the option of submitting an application to the taxation authorities in order to get a certificate that confirms the vehicle’s age. The Delhi Motor Vehicle Taxation Act exempts from paying any road tax on automobiles that are more than ten years old.

Payment of tax

A declaration form that must be filled out with the specifics of the automobile and how it is used in Delhi has to be in ownership of the individual who is the authorized owner of the vehicle or the individual who is in possession of the vehicle. Afterwards, it is the responsibility of the person to provide the paperwork to the authority in charge of taxes. The owner of the vehicle is responsible for making the payment of the tax at the rate that is specified in the Taxation Act.

Taxation card

After the automobile proprietor has settled the tax that was assessed on their vehicle in accordance with the Taxation Act’s Section 3, the taxation department will issue an invoice that specifies the period of time for which the tax has been settled. In addition, the taxation term and an indication about whether or not the authorization has been issued for the vehicle in accordance with the Motor Vehicle Act will be included on the certificate of registration.

  • Maharashtra 

The Maharashtra Motor Vehicles Taxation Act, enacted in 1958, serves as the legal foundation for the state’s road tax laws and regulations. The following is a list of some relevant facts on the laws and regulations of road tax for the state of Maharashtra.

Percentage of tax

When all of the information provided in the application form is validated, the taxation authorities will decide what the tax rate will be for motor vehicles registered inside the state. After that, the body in charge of taxing gives the automotive owner the license of taxation. The amount of tax is determined by a number of variables, among the most significant of which are as follows:

  • Maturity level of the vehicle
  • Manufacturer of this automotive
  • Combustion type, i.e. diesel or petrol
  • Length and breadth of the automobile
  • Capacity to seat
  • Number of a vehicle’s wheels
  • Engine output

Paying taxes

The owner of the vehicle has the option of making an advance payment of tax in the following ways:

  • Yearly
  • At a rate equal to one-fourth of the yearly rate for each successive quarter
  • For periods beyond one quarter, at a number of times the rate per quarter
  • For any period that is shorter than a quarter and whose end date falls in the last week of the quarter
  • At a rate equal to one-twelfth of the yearly tax rate, plus twenty per cent of that rate, respectively
  • If the duration is less than or equal to one month according to the calendar
  • At one-sixth of the yearly tax rate, in addition to fifteen per cent of the tax at the quarterly rate

Once a vehicle is enrolled, it is required to pay its road tax within a month to the taxing authorities in the jurisdiction where the vehicle is authorised. The tax may be paid in all the following ways by the vehicle owner:

  • Cash
  • DD
  • Cheque

Refund process

If a vehicle owner wishes to make a claim for a refund, they are required to submit an appeal to the appropriate authorities in which they must specify the reason for making such a claim. In addition to submitting the claim, they are required to provide a certificate of taxes. On the other hand, the application won’t be approved if the claim is lodged more than six months after the following date:

  • According to the information provided on the vehicle’s “certificate of non-use.”
  • The registration certificate of the car has either expired, been suspended, or been revoked entirely.

A person has the right to request a refund in the event that the vehicle has been permanently abandoned or moved to another state.

After the application has been submitted by the owner of the car, the taxing authorities will compute the amount of the refund. In addition to the amount of the refund, a certificate attesting to the refund’s validity is handed over to the owner. In addition to this, the document of taxation is given back to the owner of the vehicle after the relevant authority has recorded the information on the amount of the reimbursement that was given to the owner.

Issuance of tax card

After the registered keeper of the automotive has paid the appropriate amount of tax based on the imposed rate, the relevant body will give the owner a taxation card. A receipt outlining the specifics of the tax that’s been paid is sent to the vehicle owner by the entity in charge of collecting taxes. Additionally, the tax rate, as well as the time frame whereby the tax has been paid, are also included on the taxation certificate.

  • Tamil Nadu

The Tamil Nadu Motor Vehicle Taxation Act, which was passed in 1974, serves as the legal foundation for the state’s road tax laws and regulations. The following is a list of some of the crucial information that pertains to the laws and regulations of road tax for the state of Tamil Nadu.

Tax percentage 

Age of automobile Price of the automobile is below Rs.10 lakh Price of the automobile exceeds Rs.10 lakh
Fresh 10 per cent of the cost of the vehicle 15 per cent of the price of the automobile
Greater than four but less than five years 7.75 per cent of the vehicle’s cost 12.75 per cent of the vehicle’s price
Greater than nine but less than ten years 6.50 per cent of the vehicle’s cost 11.50 per cent of the vehicle’s price
11 or more years 6 per cent of the cost of the vehicle 11 per cent of the vehicle’s price

Payment of tax

The tax that is imposed by the Tamil Nadu Motor Vehicle Taxation Act must be paid by the legal keeper of the motor vehicle or by a person who has or controls the motor vehicle in one of the following ways:

  • Yearly
  • Partially
  • Quarterly

The amount of tax that must be paid is determined by the owner’s licence; specifically, it is important to know if the licence is valid for the current quarter, the preceding half-year, or the whole year.

The tax on a quarterly authorisation cannot be more than twice as much as the tariff on a half-yearly authorization, and the tax on a yearly authorization cannot be more than four times as much as the tax on the same quarterly authorization. Within the borders of the state of Tamil Nadu, the operation of motor vehicles that are not in possession of a valid licence is prohibited. In addition, no one is allowed to pay the tax on a motor during any time period in which the tax that was owed in regard to that automobile has been already paid by another individual.

Tax imposed

The rate of tax that is imposed on motor vehicles that are utilised or held for use in the state of Tamil Nadu is according to the rate that is set for such vehicles in the 1st, 2nd, 3rd, or 5th schedule, depending on which schedule they fall under. The local state legislature has the authority to alter, at their discretion, the amount of tax that is imposed on motor vehicles at any given moment, so long as they provide adequate warning.

  • Andhra Pradesh

The Andhra Pradesh Motor Vehicles Taxation Act, which was passed in 1963, serves as the legal foundation for the state of Andhra Pradesh’s road tax laws and regulations. The following is a list of some of the relevant information that pertains to the laws and regulations of road tax for the state of Andhra Pradesh.

Tax percentage 

  • Two Wheeler 
Automobile’s Age 2-wheelers with less than 60 cc More than 60 cc two-wheelers
Fresh 9 per cent of the cost of the vehicle 9 per cent of the cost of the vehicle
Greater than four but less than five years 5 per cent of the vehicle’s cost 5 per cent of the vehicle’s cost
Greater than nine but less than ten years 2 per cent of the vehicle’s cost 2 per cent of the vehicle’s cost
11 or more years 1 per cent of the cost of the vehicle 1 per cent of the cost of the vehicle
  • Four Wheeler 
Automobile’s Age Vehicles just under Rs.10 lakh Vehicles costing above Rs.10 lakh
Fresh 12 per cent of the cost of the vehicle 14 per cent of the cost of the vehicle
Greater than four but less than five years 9.5 per cent of the vehicle’s cost 11.5 per cent of the vehicle’s cost
Greater than nine but less than ten years 7 per cent of the vehicle’s cost 9 per cent of the vehicle’s cost
11 or more years 5.5 per cent of the cost of the vehicle 7.5 per cent of the cost of the vehicle

Tax imposed

The government is in charge of determining the appropriate level of taxation to be levied on motor vehicles that are utilised within the boundaries of the state of Andhra Pradesh. The kind of motor vehicle determines which tax rate applies to that particular car. It is the responsibility of the new car owner to pay those taxes within seven days after the acquisition of the automobile. For a five-year period, there will be no tax imposed on motor vehicles that are powered by solar energy, electric batteries, or electric motors.

Payment of tax

The tax that is imposed according to the Andhra Pradesh Motor Vehicles Taxation Act, 1963 must be paid upfront by the individual who is registered as the vehicle owner or by any other person who is in ownership of the vehicle. Each person is free to choose the method that works best for them when it comes to making their tax payment. Depending on the kind of licence he or she has for that particular quarter, half-yearly, or year, he or she has the option to pay either quarterly, semi-annually, or annually.

Source: https://ecis2016.org/.
Copyright belongs to: ecis2016.org

Debora Berti

Università degli Studi di Firenze, IT

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