Govt Mulling 6% Uniform Road Tax On Cars And Bikes

Published: Tuesday, February 14, 2012, 15:08 [IST]

The central government is planning to rationalize road tax imposed on new cars and bikes across the country. Currently state governments impose road tax between 2% to 18% and the Transport Development Council is planning to introduce an uniform road tax of 6% across all states.

This information was revealed by union Road Transport and Highways Minister C P Joshi who said: “There is an urgent need to rationalize the motor vehicle taxes ...There is in-principle consensus on bringing floor rates of motor vehicle tax for cars and two-wheelers at 6 per cent ... using sale price as the base rate."

Mr Joshi has said this uniform road tax system across all states will simplify the processes. He added that the decision will be finalized after it is ratified by the empowered group of ministers of states. This uniform road tax will be a boon for buyers in states where there s a tax rate that is higher than 6% and will be an additional cost in other states with lesser tax.

The amount of road tax imposed in states differ very much. The tax is based on if the vehicle is a four wheeler or two wheeler, price, engine capacity, the type of fuel used, the size of the vehicle, the emissions. Further there are some states that charge a life time tax while some collect road tax on an annual basis.

The Transport Development Council has suggested that states should ensure the road tax is at least 6% and has added the states were free to impose an additional tax if needed. It is of the view that a 6% road tax must be made mandatory. It is evident that the move to rationalize road tax is to generate more revenue for the government.

In another decision the Transport Development Council has suggested that permit fees for tourist vehicles must be waived of as the revenue generated was just Rs.40 crores. It has also suggested an online system for road tax collection must be created.