This article has been written by Oishika Banerji of Amity Law School, Kolkata. This article serves as a guide to the online payment of road tax for its readers. It has been published by Rachit Garg. Table of Contents Introduction All you need to know about road tax Who levies road taxWho has to pay the road […]
To fund the upkeep of India’s road infrastructure, the Indian government levies a tax on the purchase of a new car and therefore, it is common knowledge that any person who buys a vehicle is required to pay road tax. The road tax is a state-level tax, meaning that each state’s government imposes it separately. The procedures and regulations for collecting the road tax vary from one state to the other. The amount of tax also varies because different states impose taxes at varying percentages. The Central Motor Vehicles Act, 1988 mandates that the entire road tax must be paid upfront if a car is used for longer than a year. This article serves as a guide for online payment of road tax to its readers, as with the intervention of digitalization, payment of tax has been made easier as it has adopted the online mode as well.
India is a nation with a sizable network of highways connecting both states and various cities within each state. The state government of every state imposes a road tax or motor vehicle tax on the purchase of every vehicle in the nation, whether it be a commercial or personal vehicle, in order to fund the construction and maintenance of these roads as well as formulate the enabling provision of various safety and emergency services alongside these roads. The road network is expanded, maintained, and upgraded with the amount collected in the form of road taxes. In essence, the Vahan tax is the government reclaiming money used for various tasks, including providing security and recovery services on Indian streets.
When you buy a new car from a showroom, you’ll notice that the ex-showroom price listed in the brochure or on the company website is, depending on the state in which you reside, (around Rs. 15000 or roughly 10% lower). The base manufacturing cost of a bike or four-wheeler is added to registration fees, road tax, and insurance, bringing the final cost up to around 10% of the vehicle charge. While insurance and registration go without saying, car owners must also pay a road fee to the state government in order to operate their vehicle there.
About 80% of the roads in each state of India are built by the corresponding state government, with the exception of national highways, which are built and maintained by the Central Government. Since each state pays for its own share of the expense of building these highways, each state imposes its own road fee.
As a prospective buyer, you will also be responsible for paying road taxes to the state where you intend to both purchase and operate your vehicle. This basically implies that when you purchase a bike or automobile in the state, you will be required to pay a road tax to the Delhi government (for example). Additionally, if you relocate from Delhi to Maharashtra, you must pay a state road tax to the Maharashtra state government within a month of your transfer.
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