Wapcar – Although a Wagon R costs Rs 547,500 ex-factory across India, its on-road price is Rs 668,784 in Andhra Pradesh, Telangana and Karnataka, but only Rs 588,108 in Pondicherry. Why? Because the road tax check on an R wagon is Rs 76,650 in Andhra Pradesh, Telangana and Karnataka, but only Rs 11,000 in Pondicherry.
India’s auto sector contributes 6.4% to GDP, 35% to manufacturing GDP and contributes Rs 1.5 percent GST. Since the Goods and Services Tax (GST) came into effect five years ago, auto suppliers have switched to a single factory price across India, ending the decades-old habit of pricing Vehicles that vary based on local taxes. But the pre-TPS status persists in the price on the road. On-road prices vary widely from state to state, and sometimes buyers buy cars outside of their state of residence (in states where road taxes are lower and therefore on-road prices are also lower).
Often friends/relatives learn that they have a registered car in another state (either after purchase or because they have moved) and need to re-register it at their current location. at theirs. But it is usually a big deal because the sugar tax in different states is different.
Road tax (motor vehicle tax) is levied on each new vehicle you purchase. While the factory price is the same for all vehicles across India, the road tax is different and in some cases the difference is substantial.
An example of a popular car
Take the example of the Maruti Suzuki Wagon R, the best-selling car in India for the year 22. While the ex-factory price of the Wagon R LXi variant is Rs 547,500, the road tax in Andhra Pradesh, Telangana and Karnataka is Rs 76,650 and due where the road fare is Rs 668,784 whereas in Pondicherry the road tax is Rs 11,000 and the road fare is Rs 588,108.
Road tax is levied based on various factors including engine power, number of seats, curb weight, price, etc. Countries levy different road tax rates on different types of vehicles, such as private and company vehicles (the latter is taxed at a higher rate). Some states also tax vehicles based on the fuel they use (gasoline, diesel or CNG). There are also tax rates, i.e. vehicles that cost more than a certain amount are taxed at a higher rate than those that cost less than that amount. There are additional fees for things like greening, parking, and more.
Advantages of single-line tax
There are many benefits if India moves to a unified road tax. First, it would discourage buyers from buying from other states with relatively lower rates. Second, it will facilitate the transfer of vehicle registrations from one state to another. Under the current system, before applying for a new registration number at your new residence, you must obtain a Certificate of No Objection (NOC) from the Regional Transportation Office (RTO). A unified tax system would facilitate the re-registration of vehicles in the event of a move. Additionally, many people engage in tax evasion by registering their vehicles in states with lower road taxes. With a single tax structure, this problem is eliminated.
In 2017, 451 cars were seized by regional RTO officials for a month in Mumbai, for tax evasion amounting to around Rs 10 crore. Most of these vehicles are registered in Jharkhand, Daman & Diu and Sikkim, all with lower road tax rates. If India moves to a unified tax structure, it will also help the authorities to control these activities. The construction of a unified tax system will have a direct impact on the revenue of the State. Prices of means of transport on the road will also change, some increase, some decrease. While there is some skepticism about the change, the fact that road taxes in every state can be adjusted by the same parameters will help streamline the entire process involved in buying, selling, and selling, and own a car in India.
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