2% Hike in Maharashtra on One-Time Vehicle Registration Tax on Cars

2% Hike in Maharashtra on One-Time Vehicle Registration Tax on Cars

MUMBAI: The state cabinet has approved a 2% hike in one-time vehicle registration tax on private two- and four-wheeler vehicles. The cabinet has also capped the tax at a maximum of Rs 20 lakh to discourage registration of vehicles outside the state. The burden on vehicle buyers will be compounded by the recently introduced 2% road safety cess on this increased tax.

In Maharashtra, the tax is in the range of 9-11% for petrol-driven cars based on the cost of vehicle, and 11-13% for those that ply on diesel. The tax slabs will now increase to 11-13% and 13-15%, respectively. Officials said following implementation of the Goods and Services Tax (GST) from July 1, the state government will lose nearly Rs 700 crore as revenue towards octroi and local body tax (LBT) on vehicles. It has, therefore, decided to make up for the loss by hiking the tax to help generate an annual revenue of Rs 750 crore.

Senior transport department officials said the rate of vehicle registration tax in the state depends on the cost of cars and engine power for two-wheelers, and whether these run on petrol, diesel or CNG.

For imported high-end cars, though, the state government has capped the tax amount to Rs 20 lakh; it was earlier 20% of the total vehicle cost. The tax on two-wheelers has been increased to 10-12% from 8-10%.

“There are many cases of high-end imported cars being registered in Jharkhand and Diu Daman as the tax in these states was lower than in Maharashtra. With this decision, we have tried to get on a level playing field with most of these states,” said a senior official.

While transport experts have welcomed the government move, Ashok Datar of Mumbai Environmental Social Network said the government should have hiked road tax by at least 30%. “In some foreign countries, the registration tax is in the range of 50% to 120%. If a hefty tax is collected from car buyers, the money can be used to strengthen our public transport system.”

He further said that it was yet to be seen whether the tax hike impacts car buyers. “With abolition of octroi (4.5%) and dip in car prices in several categories, will a 2% hike in tax make any difference or will it really act as a deterrent to car buyers?” asked Datar, who has repeatedly demanded control on the growing car and bike population on city roads. Mumbai has more than nine lakh private cars and 18 lakh two-wheelers, and nearly 150 new cars are added on city roads daily.

A V Shenoy of Mumbai Vikas Samiti said, “The increase in registration charges—which is a one-time road tax—will ensure that the government earns more revenue. At the same time, though, it could be a burden on new car buyers.” Another transport expert said that increasing road tax for diesel cars to as high as 15% could ensure that the population of diesel vehicles, which causes air pollution, remains in under control on city roads.

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