Unified Road Tax system - One Nation One Tax for Vehicles

My first write up for year 2021 comes after a long break. I am elated hearing this proposal from Ministry of Road Transport and Highways and want to share this to bigger audience, though waiting for the implementation of this bill.

Before venturing into details we all have to appreciate Shri Nitin Jairam Gadkari for his tireless work and have put in significant efforts in his power as Minister of Road Transport and Highways. I wanted this guy to be PM in 2019 when the talks were high during 2019 elections but caste and political mileage are twins in Indian politics and our current PM being an OBC was favored. Let us not dive into politics.

One Nation One Road Tax is proposed to make one road tax across the country just like the Goods and services tax. Currently, there are different taxes across the country in different states according to the pre-decided rates but now it is being discussed to apply a single rate of road tax across the nation.

Currently the tax are as high as 18% in Karnataka and Maharashtra to 4% in Rajasthan. Some use Invoice value others like Karnataka, Delhi use ex show room price that is Invoice +GST and apply the % for Road Tax. Do we have better roads for the tax being paid, that is a BIG ??. 

The Automobile industry has been pushing for a uniform road tax structure. This is a concern for most of the states and union governments that the manufacturing of vehicles is getting impacted due to the different taxation systems. Hence a uniform taxation system will create an even playing field for the states and the union territories. 

Altering the revenue system can affect the state’s revenue and that is why the states have been opposing the implementation of the uniform system of taxation of road tax. 

The Government is set to release a new system of taxation very soon which will be unifying the road tax. This will help protect the revenue of the state. Road Tax is paid during the registration of the vehicle in a particular state. The Centre is trying to make the states on board sharing the vehicle registration data on the Vahan Website.

New Proposal is on Invoice value only and that,

All personal vehicles, the tax should be 8% for a vehicle costing under ₹10 lakh, 10% for a vehicle costing between ₹10 lakh and ₹20 lakh and 12% for a vehicle costing more over ₹20 lakh

For example assume a car with Invoice value of 10 lakh and GST of 4 Lakh, in the current system we will end up paying 2.5 lakh whereas now we will pay 1.0 lakh savings of 1.5 lakh.

Other proposal is also being tabled along with this is that an All India registration and the road tax will be for minimum 2 years (prorated), not for life time. Assume if you move to other state after 2 years you can pay prorata tax in that state for 2 years and continue. You will also have a choice of your registration where you can choose an India Registration and not confined to any particular state. The new Vehicle number will look like this.

But for taking India registration there is an eligibility clause and it states that the person should be working in Central Government, Defense and in case of private sector employees then the organization should have offices in minimum 5 states in India. Others are excluded from getting the privilege of an Indian registration.

With a request will end this that let it be for all without any exceptions.