The history of road tax in India goes back over a century! The first bill related to road tax was deployed more than 100 years back, in 1914.
It was replaced by the MV Act 1939 and then CMV 1988 and the Motor vehicle taxation Act 2014. This latest Act stated that any vehicle commuting in a particular state for more than 30 days but not registered in that state needed to pay a hefty tax. Thus came into existence the variation in taxes on vehicles in terms of rates, their applications and the state they were registered in. So even if a car is available at same ex-showroom prices in different states, its on-road costs will be different.
To bridge these gaps and reform the road taxation policy in our country, a Group of Transport Ministers (GoM) has proposed uniform road tax on cars across India. And the centre is considering making it compulsory for all states to abide by the proposal to ensure hassle free road travel.
- People relocating across state boundaries faced hurdles because of the need to transfer their cars. The process of re-registration and paying the differential road tax in case it is higher than the state from where the car got registered is cumbersome.
- A uniform road tax will also discourage people from buying and registering their cars in low tax states and running them in other states. Rather it would encourage them to purchase car from their home states. This would curb road tax evasion.
- A uniform road tax will positively impact the prices of cars. Prices would go down in states where current taxation is high and go up where taxes are lower.
The GoM has advocated that motor vehicle taxes should be charged by all the states on the basis of the invoice price of the vehicle to ensure uniform rates. The central government, having the power to decide the policy, has recommended three slabs – 8% tax on cars below 10 lakh, 10% for cars between 10-20 lakh and 12% for cars above 20 lakh.
Considering the unified online database for registered cars and charging road tax based on tailpipe emissions, the uniform road tax policy across India will ensure ‘Drive without Borders’ and make ‘One Nation-One Road tax’ a reality.