One Nation, One Road Tax may be implemented soon

Senior officials of some states, however, said they are weighing the Centre's proposal, as a rejig in tax rates will have fiscal implications.

Representative Image: Tax assessment

The government is looking to push for a uniform centralised road tax for personal vehicles, and in a recent meeting with the Centre, some state transport ministers have agreed to implement the same, a senior government official told Mint. But not all states agreed, and some officials said they will consider the hit on revenue collection post rate change before deciding. Kerala is expected to make a decision on this after the Budget, the paper added.

Moneycontrol could not independently verify the report. The uniform tax was thought as a solution to customers buying vehicles in states with lower taxes, which had led to a loss of revenue for those with higher tax, it said. Per recommendations from the Road Ministry, the new tax rates would be 8 percent for a vehicle under Rs 10 lakh, 10 percent for a vehicle costing between Rs 10-20 lakh and 12 percent for a vehicle over Rs 20 lakh.

Road tax is paid at the time of registration, along with GST, and thus adds to the price of a new vehicle. States currently use different formulae to calculate road tax. Delhi, for example, considers the make, model, engine and seating capacity of the vehicle, wherein a four-wheeler weighing below 1,000 kg would attract a tax of Rs 3,800.

Arunachal Pradesh considers the sale price, which works out to 2.5 percent or Rs 6,250 for a car costing Rs 2.5 lakh, and 6.5 percent or Rs 1.3 lakh for a car costing over Rs 20 lakh.

The automobile industry has long supported changes to the tax rate as a means to boost sales.
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First Published on Jan 24, 2020 01:47 pm

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