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Old 2nd September 2012, 20:05   #1
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Default Uniform Road Tax for all cars in Punjab

From 1st Sept 2012 onwards, Road Tax on all new cars in Punjab state is made uniform & now its 6% flat(of the total cost of the vehicle minus VAT) across all the segments, previously which was applicable as per the slab given below;

-Cars priced upto Rs.5 lacs(excluding VAT) attracted 2% of their price only, while now its 6%
-Cars priced above Rs.5 lacs but below Rs.10 lacs(excluding VAT) attracted 4% only, now its 6%
-Cars priced above Rs.10 lacs but below Rs.20 lacs(excluding VAT) attracted 6% only, while now its retained at 6%.
-And cars beyond Rs.20 lacs onwards attracted 8% tax previously while, now its reduced to flat 6% of its cost.

IMHO, It came as a major blow to first time car buyers which generally falls in Sub Rs.5-lacs category & now they need to pay 4% more as against previously.
While those luxury cars owners are eased now by 2%, especially those who don't mind paying few grands more for their BMW or Mercs or Audis or Land Cruisers.
I'd say it as a retrogressive move considering the money a middle class owner will be paying as against what a Rich luxury car owner can do easily & also at the time when the state is going through a severe financial troubles.

Or its really the high time that cars in Rs.<10 lacs price range, outsold the luxury ones in financial tax revenue terms !

What'd you say guys ??
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Old 2nd September 2012, 20:30   #2
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Default Re: Uniform Road Tax for all cars in Punjab

It's ridiculous. A first time owner and middle class owner is going to be hit very hard indeed. Apart from the additional 4% he would be paying, majority of <5lakh run on petrol!
Tax on luxury cars have been slashed. What were they thinking. Expect to see many more PB registered cars running around in Delhi/ncr now.

Last edited by promit : 2nd September 2012 at 20:31.
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Old 2nd September 2012, 20:33   #3
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Default Re: Uniform Road Tax for all cars in Punjab

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Originally Posted by CRtorquefan View Post
From 1st Sept 2012 onwards, Road Tax on all new cars in Punjab state is made uniform & now its 6% flat(of the total cost of the vehicle minus VAT)
I'd say it as a retrogressive move considering the money a middle class owner will be paying as against what a Rich luxury car owner can do easily & also at the time when the state is going through a severe financial troubles.
I disagree completely with you. At last, we seem to have one state in this country with somewhat sensible tax policies.

Road tax is meant to reimburse a government for the cost of building and maintaining roads. The ideal way to levy road tax should therefore be in direct proportion to the damage a vehicle causes to roads. Hence the tax levied should be proportional to the weight of the vehicle and the distance traveled by the vehicle, and should not have anything to do with the cost of the vehicle. Face the facts - the Indica or Innova Taxi that travels 40,000 km per year causes far more damage to roads than Sachin's Ferrari which barely runs a few thousand km (if that).

The ideal way of levying road tax is through a per litre specific duty on fuel - with about 25% higher taxes for diesel than for petrol. Why? Because diesel vehicles of equivalent weight consume less diesel per km than petrol vehicles, and cause more damage to roads per litre of diesel consumed.

The current method of imposing an upfront One Time Tax on an ad valorem basis (viz as a percentage of car value) represents a socialist imposition, wherein people who buy costlier cars are being forced to cross subsidize people who buy cheaper cars. Even with the revised tax structure in Punjab, a person buying a BMW 320 D would pay Rs. 210,000 as OTT while someone buying an Innova (which is far likelier to damage roads) is going to pay only Rs. 60,000.

The structure that some states like Karnataka have (and Punjab had earlier, albeit at a lower level) wherein taxes rise with the price of the car being purchased are even more unjust. For example if a 20% tax is charged on a 320D and a 10% tax on an Innova, the Innova owner gets away paying just Rs. 100,000 while the poor 320D owner pays Rs. 700,000, which has nothing to do with the cost his car ownership imposes on road infrastructure.

For those who say the 320D buyer is rich and he should be taxed more, please remember that is already the case. The 320D buyer pays higher income tax assuming he buys his car from post tax earnings, higher CENVAT, and higher State VAT. High road taxes represent yet another unjust levy.

Last edited by Hayek : 2nd September 2012 at 20:34.
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Old 2nd September 2012, 20:44   #4
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Default Re: Uniform Road Tax for all cars in Punjab

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Originally Posted by Hayek View Post
Even with the revised tax structure in Punjab, a person buying a BMW 320 D would pay Rs. 210,000 as OTT while someone buying an Innova (which is far likelier to damage roads) is going to pay only Rs. 60,000.
Simply Spot on.

That's what I had posted question in my opening post above(as quoted below also).
Quote:
Originally Posted by CRtorquefan View Post
Or its really the high time that cars in Rs.<10 lacs price range, outsold the luxury ones in financial tax revenue terms !

What'd you say guys ??
Does still an Alto can do more damage than a BMW or an Innova can ?
I think first time car owners or cars below Rs.<3 lacs needs to be spared, as else still can pay that much amount quite easily.

Then, Diesel & Petrol cars have also to be taxed separately, considering the Road & environmental damage they do, as per you Hayek.
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Old 2nd September 2012, 21:52   #5
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Default Re: Uniform Road Tax for all cars in Punjab

How I wish this had anything to do with sensible economics.

Akalis in Punjab have a devoted vote bank in rural Jatt Sikhs, and they know they can get away with anything as long as that specific segment is not touched, and the freebies enjoyed by them (free power, free water) are not taken away.

The tax mentioned above is just another added to a long list urban folks are paying(and suffering from). For instance, the difference between petrol and Diesel prices is so skewed that anyone buying a petrol is considered crazy nowadays. An one time, petrol had become twice as expensive as Diesel! And why so? Only because petrol is consumed predominantly by urban folks.

Nevertheless what Hayek has mentioned does make sense. Still would say that don't have it extremely skewed, but 4% below 5L and 6% flat charges above 5L should be reasonable enough IMO.
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Old 3rd September 2012, 12:46   #6
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Default Re: Uniform Road Tax for all cars in Punjab

We pay 12.5% for first time car buyers and if you have an existing vehicle, be ready to pay 14.5%, here, in Hyderabad. When you mentioned the previous tax as 2% I just could not believe my eyes.

I'm of the opinion that this new tax structure will help bring a lot of taxes into the coffers since the volume of cars sold in the sub-10lakh segment is a lot higher than the volumes in luxury cars. Could be put to good use for building infrastructure for the ever increasing car base. What they actually do with the taxes is a whole other debate altogether.
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Old 26th October 2012, 06:56   #7
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Default Re: Uniform Road Tax for all cars in Punjab

Sounds a lot more sensible than the crazy rates they have here in Karnataka. All said and done, yes a flat tax rate does impose a greater penalty on low rates rather than high rates (economics 101) but it is the best compromise. With these rates there is no need for car manufacturers to start playing around with cost amounts when they are around a threshhold.
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Old 26th October 2012, 08:56   #8
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Default Re: Uniform Road Tax for all cars in Punjab

Considering Govt. Policies all over India, I cannot find much fault in "uniform policy".

Agreed with Avsidhu's comments 100%. Its either the Rural folk or the SC/BC's that are enjoying everything in Punjab. Urban population is the worst affected. No policy is in their favour. The imposition of Property Tax on residential properties/plots is another big blow to the Urban middle class. Electricity charges were raised "retrospectively", this was voting was over. Again the poor Urban population bearing the brunt because Electricity is FREE for the rural dwellers. So one can judge the level of governance!
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Old 26th October 2012, 09:18   #9
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Default Re: Uniform Road Tax for all cars in Punjab

What a Brilliant post!!! Thank you!

1. Road Taxes in Karnataka are criminally high because there are no roads to speak of even in Urban areas like Bangalore etc.
2. If the Road Taxes need to be levied on the basis of weight of vehicle and damage it causes to the roads, then the Water tankers, lorries and other vehicles along with the Taxicabs and Sumos and BPO wagons need to pay the highest road tax. I am with you on this - perhaps this will act as a deterrent in some measure to the proliferation of these vehicles.
3. I am not sure I agree that the Diesel vehicle of equivalent weight causes more damage to roads per litre of Diesel consumed. I own one of the most efficient, excellent and pretty lightweight Diesel vehicles, the Skoda Yeti. I am a 100% sure that my Yeti does NOT cause any more damage to the roads than say, a Chevrolet Cruze Petrol or for that matter a Honda Civic Petrol! Hence I am not able to accept or even understand your point.
4. The Nehruvian legacy of Quasi Socialism is probably the single biggest cause for our non-competitiveness and laissez faire attitude. I completely agree about the owners of more expensive cars ending up cross-subsidizing the owners of cheaper cars.
5.Anyone who says that the "rich" need to be taxed more is correct upto a point. The so called "rich" from the salaried/ taxed classes are already paying close to 50% of their income to the government by way of direct and indirect taxes! I think the real rich people out there are the "businessmen", "mining barons", "quasi-agriculturists", "scumball politicos", "real estate rats" and others who are hiding behind archaic policy in collusion with the corrupt commissars, bureaucracy and politicians. It has long been evident - right from the 1960's and 70's that "agriculture" was a brilliant, legally countenanced, front for tax evasion. I have always maintained that yes, there should be a lot of subsidies and help given to the small holder and the really poor farmer but NOT to those "fat cats" who own vast acres. While the land ceiling act tried to abolish vast land holdings, all it has really succeeded in doing is to create frighteningly complicated cross holdings and a labyrinthine set of inter-related holdings which will take a million years of hard effort to unravel!
6. Lastly,we can all shout ourselves hoarse as much as we like, but things are not really going to change in a hurry.
7.Injustice to honest wage earners is simply a way of life here in this Banana Republic with its resident, apathetic Mango People!!!

Quote:
Originally Posted by Hayek View Post
I disagree completely with you. At last, we seem to have one state in this country with somewhat sensible tax policies.
High road taxes represent yet another unjust levy.

Last edited by shankar.balan : 26th October 2012 at 09:20.
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Old 26th October 2012, 09:39   #10
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Default Re: Uniform Road Tax for all cars in Punjab

Punjab is lucky with only 6%. Most states are higher with some like KA phenomwnally so. 6% will be one of the cheapest.
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Old 26th October 2012, 09:56   #11
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Default Re: Uniform Road Tax for all cars in Punjab

For the record, in 2008 we paid 2% tax on the safari (around 18000). We used to be envious of Haryana where tax was just 1%. And then there was Chandigarh, with flat 6000rs tax or something like that.
So this 6% is indeed quite a shocker you see!
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Old 26th October 2012, 10:06   #12
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Default Re: Uniform Road Tax for all cars in Punjab

One basic question that should be asked is. Why must we be taxed so much ?

Firstly when you make a car, all the components that go into manufacturing are taxed at every step. Vendor pays tax for the raw material, steel billets, plastic granules that he buys. The car manufacturer pays tax for whatever it buys from the vendor. Each & every item is taxed. That itself adds onto such a hefty sum. Then again there is sales tax, excise tax, central tax and yada yada tax that goes to the same govt coffers.

Then you pay taxes for using some broken roads, for what .. the taxes paid by the vendors and manufacturers not enough ? The sales tax, excise duty, octroi, Central taxes, Ad valorem tax, tax on petrol & diesel (more than 100% of cost), Value Added Tax, Goods & Services Tax paid on cars not enough ..
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Old 26th October 2012, 13:53   #13
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Default Re: Uniform Road Tax for all cars in Punjab

The Govt thinks that a car owner is a milch cow! UP has just jacked up the road tax from 7% to 8% - they want to be the same as Delhi. So my Brio V AT goes up by another 6k.
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Old 19th April 2017, 17:38   #14
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Default Re: Uniform Road Tax for all cars in Punjab

What is the latest Road Tax for Punjab? Is it 8% now?
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Old 25th April 2017, 21:42   #15
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Default Re: Uniform Road Tax for all cars in Punjab

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Originally Posted by drsingh View Post
What is the latest Road Tax for Punjab? Is it 8% now?
Anybody?Somebody?Insights?
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