Government proposes 6% road tax on cars and two wheelers

Indian government recenlty came up with the suggestion to levy one-time road tax of 6 percent on the total sale price of cars and two wheelers across states in the country. The proposal was made in view to rationalize tax collected on motor vehicles across the nation. Centre also came up with ideas like online tax collection system, the online collection tax system will provide more convenience to the citizens for paying their tax on time. The government is also planning to remove permit fee on tourist vehicles as the remuneration from this department is only fetching Rs 40 crore, which is very low.

According to Road Transport and Highway Minister C.P. Joshi, government is planning to bring the uniform taxing system across the nation, by collecting six percent tax calculated on sale price for two wheelers and cars in India, he also said that immediate attention is being given to this proposal and will be discussed in details across states in India. About 2 to 18 percent of tax is collected on four wheelers and two wheelers. Some states charge life long road tax and some charge this tax on annual basis. Moving a step further Delhi state government also charges parking tax as part of tax collection on two and four wheelers. The tax is collected based on various factors which varies in every state.

For instance some states collect tax depending upon the fuel price, or vehicle's engine capacity and sale price of the vehicle. Transport Development Council has also proposed that apart from the fixed 6% base rate of road tax on two and four wheelers, state government can be given some flexibility for additional taxing powers on specific models. Cars are placed in the bracket of 6% tax which will be calculated on the sale price of the car excluding Value Added Tax [VAT].

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