In this article, Akshita Rishi pursuing M.A, in Business Law from NUJS, Kolkata discusses Rules & Regulations Related to Road Tax in India.
Road tax as the name suggests means the tax levied on any vehicle before it is used in public on the road. It is a state level tax, i.e. it is imposed by various states at their individual level, which leads to a varying percentage of taxes in different states.
Road tax is one of such taxes, which are very important for every individual tax paying citizen of India.
It is nowadays important because approximately one person amongst three owns a vehicle. Also, Road tax is a compulsory tax paid by the person when he purchases it.
So, it is paramount to know about tax, which is popularly paid by many.
Let us Understand the Concept and Related Rules Framed by Government
Vehicles Liable to Pay Road Tax
This tax is paid on all the vehicles including two-wheelers and cars. The tax is levied on all private and commercial vehicles.
Authorities who Levy such Taxes
Road Tax is levied by,
- Central Government
- State Government
- Local Authorities
Reason Behind the State Levying Road Tax in India
In India, all the roads are not made by the Central Government. Around 70% to 80% roads in the state are constructed by their respective state governments. So, obviously the cost is borne by the state government due to which they are given the responsibility to impose road tax for their state. This is the reason behind different rates in different states.
So, the reason behind such different rates is clear but still due to variation in the tax rates, the common man faces a lot of problems in transfer of vehicles or goods from one place to another.
The transfer process is also time consuming, thus, creating complications for the common person.
Time of Payment of Road Tax
Road Tax is paid when the registration of the vehicle takes place. It is paid either on a yearly basis or once in a lifetime. This payment depends on the various criteria of the state governments. However, if the owner of the car uses it in some other state, i.e. not in the state where the vehicle is registered and the owner has paid the road tax for the lifetime, then in this case, the person has to pay the road tax again in the new state.
- Like in Delhi, the Road Tax is paid at once at the time of registration.
Place of Payment of Road Tax
The Road Tax is paid at the Regional Transport Office i.e. RTO.
Calculation of Road Tax
The calculation of Road Tax is done on the basis of ex-showroom price of the vehicle purchased.
Following Points are taken into Consideration while Calculating Road Tax,
- Age of the vehicle
- Seating capacity of the vehicle
- Weight of the vehicle
Rates of Road Tax in India
In India, Road Tax is imposed by three bodies of the Central government, State government and local authorities. Customs duty, Central excise and central sales tax are levied by central government, motor vehicles tax, passenger and goods tax, state vat and toll taxes are charged by state government and local bodies collect Octroi.
When a vehicle is purchased Central Excise Duty, Central Sales Tax and state VAT are applicable at 10%, 3%, 2% and 12.5% respectively.
For example, The rate of tax in Gujrat is 6% while in Tamil Nadu, it is 10% for the cars amounting to ₹10 lakhs and onwards.
As per Central Motor Vehicles Act, if a car is being used for more than a year, then it is compulsory to pay the whole amount of road tax at once.
Refund of Tax Paid
If the vehicle is used for less than 15 years and the owner decides to scrap or discard it, then he needs to cancel the registration of his vehicle at the Regional Transport Office in which the vehicle was registered. In case of transfer of registration of vehicle from one place to another, then the refund of tax can be claimed from the RTO in which the vehicle was initially registered and not in the RTO in which the vehicle was subsequently transferred.
Following Steps are Taken to Cancel the Registration
- Either the Engine or Chassis number is removed from the vehicle and it is submitted at the RTO.
- The number plate is also submitted after removing it from the vehicle.
On successful completion of these steps, the refund can be claimed after submission of other relevant documents which the authority may deem fit.
Online Payment of Road Tax in India
Online payment of Road tax can be done for the transport vehicles which are registered with the respective Transport Department. Any user can pay the tax by entering and submitting the Vehicle Registration Number and the Chassis number. They have to then select the mode of payment of tax and complete the payment process.
Role of GST i.e. Goods and Services Tax on Road Tax
Goods and Services Tax is the new tax replacing all the Indirect taxes. However, it is to be noted that some of the taxes like Road tax, Property tax, Stamp duty is outside the ambit of GST.
Thus, there is no effect of GST on road tax in India.
As the Rate of Tax of Different States is Different, So Let us Understand the Rules and Regulations of a few States
Delhi, the Capital region levies Road tax as per Delhi Motor Vehicle Taxation Act, 1962.
The Road tax is paid under Section-3 of the above-mentioned act at the time of registration of the vehicle at RTO.
Rates of road tax
Different types of vehicles pay different percentage of tax. The number of drivers also plays a major role while calculating tax for commercial vehicles.
The Amount is as follows,
- Maximum passengers excluding the driver are liable to pay ₹305. However, more than two but upto 4 are required to pay ₹605. This amount increases as the number of passengers also increases. If the passengers are more than 18 or above excluding both driver and conductor, the owner is liable to pay ₹1915 plus ₹280 per passenger.
- The rates for airlines and staff vehicles are same as that of commercial passenger vehicles as mentioned above.
- The loading capacity of the goods vehicles plays a dominant role for commercial goods vehicles.
- If the loading capacity of the vehicle is less than 1 tonne then the road tax is ₹665. As the loading capacity increases, the amount liable to be paid by the owner also increases. For the vehicles of more than 1 tonne and less than 2 tonne the amount of tax is ₹940. The maximum tax which the owner is liable to pay is ₹3790 plus ₹470 per tonne. For trailers the amount increases as per the additional 10 tonnes and per trailer. In such a case, the maximum amount which the owner is liable to pay is 3,790.00 [email protected] Rs.470/-per Tonne + Rs.925/-
- It is to be noted in the case of the trailer that the road tax is charged to the corresponding registered vehicle only.
- For auto rickshaws ₹305 per annum is to be paid by the owner and in case of taxis ₹605 per annum is to be paid.
Payment of Road Tax
For personal use of vehicles, the Road tax is paid at once only, but in case of commercial vehicles, the Road tax can be paid on monthly, yearly and half-yearly basis as well. Such vehicles include all autos and taxis also.
Place of Payment
For private vehicles, the Road tax is paid at the respective Zonal Registration Office. Such payment is one-time payment only.
In case of commercial vehicles, the tax is deposited at the Headquarters of the Transport Department in the Account branch.
Time of Payment of Road Tax
The tax is to be paid at the time of registration of the vehicle. This provision is covered under Section 3 of Delhi Motor Vehicle Taxation Act,1962.
The tax is paid at once and not on yearly basis.
In case the same vehicle if already registered either in Delhi or some other state, amount of one-time tax will be “amount specified in column (2) of part B of Schedule I and subtracting the proportionate amount of one-tenth of the tax which is calculated on each completed year from the month in which the vehicle was registered. If the vehicle is more than 10 years old, then this rule is applicable if the owner applies to the taxation authority for an endorsement and inform them that, as the motor vehicle is more than 10 years of age so the use of vehicle will not attract any tax.
Payment of Tax
The Registered owner of the vehicle or the person having control of such vehicle, either used or kept for use in Delhi is under obligation to fill up and sign the form, prescribed under the act stating all particulars. This form is then delivered within the prescribed time to the taxation authority.
After successful payment under Section 3 of this Act and the owner has proved to the authority that no amount is due on such vehicle, the Taxation Authority will issue a token to that person. The token will be valid only for the period for which the payment has been done. This will also be mentioned in the Certificate of registration.
In case the vehicle is used or kept for use in Delhi, is either altered or is propounded to be used in such a manner in which the owner or the person in possession is liable to pay additional tax, in this case the person is required to disclose all the related information and pay such tax with respect to such vehicle.
Certificate of Insurance
The Certificate of Insurance is compulsorily required to be presented at the time of payment of Road tax by the owner of the vehicle or the person in possession of such vehicle.
Arrears of Road Tax
If there is arrear of tax and the person before payment of such tax has either transferred the vehicle to another person or has terminated the ownership, then in such a case, the person currently in possession or the legal owner of the vehicle is liable to pay such road tax.
Penalty in Case Road Tax is not Paid
When the person in possession of the vehicle or the registered owner of the vehicle makes default in making payment of Road tax, then the Taxation authority may direct such person to pay the arrears of tax along with an amount not exceeding the annual tax payable with respect to such vehicle. This amount will be recovered as penalty from such person.
Calculation of Road tax
Following things are taken into consideration while calculating Road tax in the state of Maharashtra:
- Age of the vehicle
- Manufacturer of such vehicle
- Fuel type i.e. petrol or diesel
- Measurement of such vehicle i.e. it’s length and width
- Seating capacity
- Number of wheels of the vehicle
- Engine capacity of such vehicle….and many more
Schedule A (III)
This schedule mentions the tax rate with respect to the weight in kilograms. For less than 750 kg, the tax rate per year is ₹880. The amount increases with the increase in weight, like if the weight is equal to or more than 6000 but less than 7500 then the amount of tax will be ₹3450. The maximum tax to be paid shall be ₹8510 plus ₹375 to be paid for every 500 kilograms and part with respect to increase in excess of 16,500 kilograms.
Schedule A (IV) (1)
This schedule explains the tax rates with respect to the vehicle type. The vehicles which are licensed to carry 2 passengers is ₹160 per seat per year. With the number of passengers, the rate per seat per year also increases. The maximum tax is ₹600 per seat per year for a vehicle which carries 6 passengers.
The vehicle type differs and so as the rate of tax for,
- a) air-conditioned taxi
- b) Tourist taxis for AC or non – AC taxi or foreign make.
There are other schedules also like:
Schedule A (IV) (3) (A) stating the tax for inter-state route.
Schedule A (IV) (4) states the special permit vehicle covered under Central Motor Vehicles Act
Schedule A (VIII) deals with tax for transport of goods excluding for agricultural purposes.
Assessment of Tax Rate
The Taxation Authority shall verify all the particulars filled in the application form of registration and shall determine the rate of tax which will be imposed on the vehicle. This is applicable on all the vehicles registered in the state. In case the Taxation authority and registering authorities are different, the registering authority after verifying the particulars furnished by the person will intimate and forward the fact of such registration to the taxation authority so that it can also ascertain the rate of taxation applicable to such vehicle.
Payment of Tax
The tax can be paid with a government treasury also. Mode of payment can be as follows,
- Demand draft
- Money order
This payment is done to the Taxation Authority in whose jurisdiction the vehicle is brought to be registered. In case of Government Treasury, the payment is done.
Change in Address or Transfer of Ownership
In Case of Change of Address
The owner has to inform the taxation authority in writing within 30 days but only in case if the transfer of the vehicle is in the same jurisdiction. If the transfer of vehicle is in another jurisdiction, then the owner shall forward the certificate to the jurisdiction in which the vehicle is being transferred so that the new address may be entered therein. The owner shall also intimate the taxation authority in which the vehicle was previously registered.
In Case of Transfer of Ownership
The transferor should within 14 days of such transfer, inform the taxation authority in form ‘TCR’ and also send a copy of this form to the transferee. The transferee, on the other hand, should inform about such transfer to the taxation authority in the jurisdiction of which the vehicle is being transferred (i.e. either at the place of residence or business) in form ‘TCA’ and shall forward to them, the certificate of transfer along with the copy of documents received by him from the transferor so that the particulars of transfer of ownership can be amended in the certificate of taxation by the authority.
Certificate in Case of Non-User of a Vehicle
The owner in whose name the vehicle is registered or the person in use have to make a declaration to the appropriate authority in writing on the following matters:
- The name and address of the registered owner or the person in possession of the vehicle, as the case may be.
- Registration mark of the vehicle.
- The starting and the end date during which the vehicle will not be used.
- The address of the place where the vehicle will be kept in the duration of its non-use.
- Reasons behind non-use of the vehicle.
- A declaration stating that the owner or the person in possession of the vehicle will not use the vehicle sans prior approval from the Tax Authority.
- A declaration stating that the certificate of taxation will be surrendered along with the declaration.
The above-mentioned declarations shall be made before the period of non- use of the vehicle is commenced and before the termination of current period in which the tax is to be paid.
Declaration for Payment of Tax
The following declarations shall be made in Form ‘AT’ stating-
- The registered trade mark on the vehicle, if any
- In case of advance payment of tax, the period of payment of tax
- The type of fuel used for the vehicle i.e. petrol or diesel
- In case the vehicle is covered under Clause A in the first schedule of the act and the mentioned tax rates are applicable to it then, it is compulsory to mention if the vehicle is,
- Used only in the limits of the local authority which has imposed tax on the vehicle.
- Used both in or out of the limit of local authority.
It is to be noted that a fresh declaration is required to be made each and every time the tax payment is done.
Under Section 9, the person claiming a refund is liable to submit an application to the appropriate authority in Form ‘DT’ mentioning all the relevant grounds to claim the refund along with the certificate of taxation. However, the authority will not entertain any application if such application is made after the expiry of six months from the date,
1) Mentioned on the “certificate of non-use” for the last date of non-use of the vehicle.
2) Cancellation, expiry or suspension of the certificate of registration of the vehicle.
The refund can also be claimed if the vehicle is permanently discarded or has been removed from the state.
After the application is received by the Taxation Authority under Rule 12, the amount of refund is calculated and a certificate is issued to the applicant in Form ‘ET’. Also, the Certificate of Taxation is returned to the applicant after entering the details of refund paid by the authority.
Such refund is claimed by the applicant within 90 days of issue of such certificate, by presenting Part II and Part III of the certificate at The State Bank of India, The Reserve Bank of India or any other bank which undertakes the cash business of the State Government. Part III of the certificate will be returned by the Taxation Authority with a “P stamp” to the Tax Authority, after the refund is done.
Vehicles Exempted from Levy of Road Tax
The Registered Owner or the person in possession or control of the vehicle can claim exemption from tax under Section 13 by making an application in “Form MT.
Any application made by the applicant can be entertained by the Regional Transport officer only if the application for the vehicle is made in respect of the following issues:
- The vehicle is covered under sub-section (1)of Section 13.
- The vehicle is a tractor which is used for drawing trailers solely for the purpose of conveying goods used for agricultural purpose. Any tractor used for transportation of agricultural produce from the farm to any godown, marketplace or the residence of the owner.
- The vehicle belongs to the United Nations International Children’s Emergency Fund, New Delhi and is given to the Government of Maharashtra on the basis of a loan to execute schemes under the Community Project Programme. Also, it is mandatory that it should be registered in the State of Maharashtra.
- The vehicle either belongs to The Government of India or The Government of Maharashtra
- The vehicle belongs to the Consular and Diplomatic Officers
- The vehicle belongs to the Cooperative for American Relief Everywhere Inc. (CARE). Also, it should either be imported or locally purchased and is used solely related to the work of a specific organisation in State of Maharashtra.
The Karnataka Road Tax Rules are stated under the Karnataka Motor Vehicles Taxation Act, 1957. The act has been amended several times thereafter.
Certain provisions with respect to Karnataka road tax are: –
- The cost of the vehicle and the age plays an important role.
- For 2 wheelers, the new vehicles which cost less than ₹50,000 or more than 50,000 are liable to pay 10% and 12% of the cost of such vehicle respectively. Vehicles that run on electricity have to pay 4% of the cost of such vehicle. Vehicles less than 5 years old are liable to pay 73% to 93% as covered under clause A and those of 10 to 15 years old have to pay 45% to 25% under clause A.
- For 4 wheelers, new vehicle which cost less than 5 lakhs have to pay 13% of the cost of such vehicle and those above 5 lakhs upto 10 lakhs pay 14%, and 17% and 18% is paid by those owners owing vehicles ranging 10 lakhs to 20 lakhs and more than 20 lakhs respectively. Vehicles which run on electricity have to pay 4% of the cost of such vehicle. With respect to age, the rate of tax is same as of 2 wheelers.
Life Time Tax Payment
If the vehicle is registered in some other state but is currently operating in Karnataka, then such vehicle owner is not liable to pay lifetime tax again if such vehicle is used for less than one year in this state.
Levy of Tax
The Tax is imposed on all the vehicles which are considered feasible to be used on road. The rates applicable on such vehicles are specified in Part A of the schedule.
Payment of Tax
The payment of tax is done within 15 days of the commencement of each quarter, year or half-year, as required under Section 3. This payment is done in advance by either the person in possession of such vehicle or the registered owner.
After payment of tax which is levied on vehicle under Section 3, the Taxation authority will issue following to the applicant:
- A receipt specifying the amount of tax paid
- A Taxation Card mentioning both the rate of tax levied and the period for which the tax has been paid.
- It is to be noted that in case of no Taxation Card with the owner or person in possession of the vehicle, such vehicle which is liable to pay tax under Section 3, cannot be held in custody unless the owner obtains Taxation Card.
Here we have discussed only a few states and their Road tax rules and regulations. However, as we discussed above, different states in India have different rules and regulations. This can clearly be concluded from the above provisions specified and followed by different states.
As per a news report by Economic Times, Karnataka is charging the highest tax amongst all the states in India. Even Delhi and Maharashtra are not that behind. They both charge the highest tax on diesel vehicles.
However, Maharashtra, on the other hand, charge lowest tax rate for CNG-run cars. The Road tax is found is to lowest in North Eastern region.
Thus, for every layman, knowledge of road tax is crucial, according to the current scenario.
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1) National implementations of road tax- Wikipedia
2) Blog post on “road tax is refundable on transfer and cancellation of registration”
3) Delhi government transport department official web site
4)National portal of India – Government of India official website
5) Delhi Motor Vehicles Taxation Act, 1962
6) The Maharashtra Motor Vehicles Tax Rules, 1959
7) Bank bazaar.com
8) The Karnataka Motor Vehicles Taxation Act, 1957
9) Bank bazaar.com
10) Blog post on “Road tax in Karnataka is the highest, North East levies the least”