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Old 7th June 2013, 10:21   #31
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Default Re: Soon, uniform road tax of 6% across all states

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Originally Posted by byomjeet View Post
Like many other countries, in India also, the Government needs to think about levying the Road Tax (RT) along with the fuel. The road tax can be the part of the other taxes levied on petrol/diesel/CNG/LPG.

Yes, the road tax is a state subject and it should go to the State Government. The State Government will take its share of Road Tax from the overall sales of fuel, like they do in case of VAT.

There are many advantages of this scheme.
1. An example: Me and my friend bought the same model car at the same time. We paid the same amount of road tax. I run the car around 2000 KMs per month but my friend hardly uses his car and clocks about 500 KMs per month. My friend who hardly runs the car on the road paid the same amount of road tax like me but I rip the road. This scheme will bring in parity.

2. Wherever you go and run the car and fill fuel, you pay tax there, be it any state. So, if you are running the car in Tamilnadu, you have to fill fuel in Tamilnadu and pay the road tax to Tamilnadu Government. If you are bringing the car to Andhra Pradesh and running there then you have to fill fuel and Aandhra Pradesh and pay the road tax to Andhra Pradesh Government.

3. The more I run the car, the more I use the road and the more I pay the road tax.

But in this case, the road tax should be uniform in all the state.

You comments are solicited.
I understand your point, but we already pay enough taxes on the fuel .
Coming to the concept of taxes in general, different states have different tax structure. Be it fuel tax or Road tax. States revenue and budget is directly linked to it. So Its a complicated process to bring sudden change so fast.

But there should be some change brought fast to states which charge high fuel tax as well as hefty road tax but roads are no where close to its neighboring states. (For example, my karnataka state )
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Old 7th June 2013, 13:47   #32
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Default Re: Soon, uniform road tax of 6% across all states

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Originally Posted by byomjeet View Post
Like many other countries, in India also, the Government needs to think about levying the Road Tax (RT) along with the fuel. The road tax can be the part of the other taxes levied on petrol/diesel/CNG/LPG.

Yes, the road tax is a state subject and it should go to the State Government. The State Government will take its share of Road Tax from the overall sales of fuel, like they do in case of VAT.

There are many advantages of this scheme.
1. An example: Me and my friend bought the same model car at the same time. We paid the same amount of road tax. I run the car around 2000 KMs per month but my friend hardly uses his car and clocks about 500 KMs per month. My friend who hardly runs the car on the road paid the same amount of road tax like me but I rip the road. This scheme will bring in parity.

2. Wherever you go and run the car and fill fuel, you pay tax there, be it any state. So, if you are running the car in Tamilnadu, you have to fill fuel in Tamilnadu and pay the road tax to Tamilnadu Government. If you are bringing the car to Andhra Pradesh and running there then you have to fill fuel and Aandhra Pradesh and pay the road tax to Andhra Pradesh Government.

3. The more I run the car, the more I use the road and the more I pay the road tax.

But in this case, the road tax should be uniform in all the state.

You comments are solicited.
Have to agree charging road tax per litre fuel consumed seems an eminently fair idea.
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Old 7th June 2013, 16:03   #33
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Default Re: Soon, uniform road tax of 6% across all states

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Originally Posted by shankar.balan View Post
There is a fuel surcharge for infrastructure development which is being levied right from the year 2000. I would take all the 'investments' with a tablespoon of salt because judging by the quality of what we see.
Excellently put. One couldn't have said it better. There are other states which possibly have invested no less than Karnataka, but the road tax here feels like extortion. Owning the same car in some other state makes a huge difference in terms of the payout.

When I first came here 7 years back, I used to be surprised at the culture of high beams. But then in a few days, I realized why it was so. Lack of street lighting in many places!

On my first drive to the airport, I was enthralled by the near signal-less, silky smooth roads once I left the city. Bright lights all around, and I would cross 80, the official speed limit in no time. Now, I have stopped driving to the airport to pick up friends/family.

Last edited by GTO : 8th June 2013 at 11:14. Reason: Quoted post edited
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Old 7th June 2013, 16:21   #34
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Default Re: Soon, uniform road tax of 6% across all states

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Originally Posted by speedmiester View Post

and it will make movement between different states an easier affair.
I won't think this would mean people can ply outside state vehicles.. People will have to convert/pay road-tax of current state to use their vehicle.
This will reduce the high-end vehicles of PY registered & running in Bangalore
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Old 7th June 2013, 16:25   #35
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Default Re: Soon, uniform road tax of 6% across all states

Road tax is a state subject and a major source of a states budgetary Revenue.
In Kerala we have the slab system ad valorem .So if one buys a 15lakh plus car the rate is 15percent of the invoice value.For the common mans car below 10lakh it is only 6-8 percent .This progressive taxation scheme was based on public opinion and cant see what is unfair in it.This single rate all over the country rule like the GST would take time to get implemented
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Old 7th June 2013, 16:55   #36
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Default Re: Soon, uniform road tax of 6% across all states

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Originally Posted by ajay99 View Post
Road tax is a state subject and a major source of a states budgetary Revenue.
In Kerala we have the slab system ad valorem .So if one buys a 15lakh plus car the rate is 15percent of the invoice value.For the common mans car below 10lakh it is only 6-8 percent .This progressive taxation scheme was based on public opinion and cant see what is unfair in it.This single rate all over the country rule like the GST would take time to get implemented
Karnataka has the same system, only the tax added is between 14.2-21.2% depending on the cost of your vehicle. Kerala excels in progressive legislation, only problem is that arbitrarily chosen price brackets to impose higher taxes is hardly that. A real progressive tax would have taken into account engine size, vehicle weight and its usage.

The rural areas of central and southern parts of Kerala atleast have better roads now. The road tax has very little to do with road quality, the funding is from a central government scheme.
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Old 7th June 2013, 17:02   #37
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Default Re: Soon, uniform road tax of 6% across all states

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Originally Posted by ajay99 View Post
Road tax is a state subject and a major source of a states budgetary Revenue.
In Kerala we have the slab system ad valorem .So if one buys a 15lakh plus car the rate is 15percent of the invoice value.For the common mans car below 10lakh it is only 6-8 percent .This progressive taxation scheme was based on public opinion and cant see what is unfair in it.This single rate all over the country rule like the GST would take time to get implemented
This is not progressive. A car costing 999999 will attract 5% which means 50,000 in tax
A car costing 1000001 will be taxed at 8% which means 80000 in tax
So a mere 2rs increase in price leads to 30,000rs increase in tax, which is totally illogical.
The tax on cars should be slab based.
For example a car which costs 20 lakhs
5 lakh taxed at 5% = 5000
next 5L at 10% = 10,000
Next 5L at 15% = 15000
Next 5L at 20% = 20000
Total tax on a 20L car would be 50000rs

Car costing 499999 and 500001 will not have 5000rs tax difference due to 2rs price difference.

This is differential taxation system, not the totally mathematically illogical system all states have in place.
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Old 7th June 2013, 17:03   #38
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Cool Re: Soon, uniform road tax of 6% across all states

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Originally Posted by shankar.balan View Post
Most of our public roads are in a mess. While they are building flyovers, to travel beneath these is a mortal danger to man, beast and vehicle beause they just cannot be bothered to fix the roads beneath these great flyovers while the work is in progress.
You've said all that I could have expressed and more. I'd like to add one point though. 6% or 16% - what matters is what are we trying to promote? Low taxes prompt more cars on the road, which lead to more congestion and all the bad things follow. When I thought of buying a car, I was suggested by most that I buy in in my home town(it was a crazy 65k difference with the transport costs included due to the road tax) But the fact remains that I intend to use the car in Bangalore, I should pay the road tax which aligns to that fact.

Now coming to the tax % itself - 6% or 16% it depends on the facilities being provided. I would not mind paying 16% if the roads were clean, pavements were maintained, the flyovers were built quicker. I would still mind paying 6% if the roads are pathetic and of no use.

The truck loads of money Karnataka Govt receives - where the hell does it go? The infrastructure is crumbling. The roads in the city are a joke. Get me the facilities and I'd show you the money!

In any case I feel what will happen is that they might have a minimum of 6% as Road Tax and then leave it upto the State Governments.

I have also seen very interesting suggestions like India wide registration numbers. Good suggestion, my only question; how would you do it? Even if you code it, people would still know which you belong to, unless we really go bonkers and start giving Random Numbers!

On another side note (and slightly OT), look at the taxes in Singapore - I think it starts around the 100% mark but the roads are super. However if you somehow don't buy your car, you get to travel in the overcrowded SBS (their metro).
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Old 7th June 2013, 17:35   #39
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Default Re: Soon, uniform road tax of 6% across all states

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Originally Posted by tsk1979 View Post
This is not progressive. A car costing 999999 will attract 5% which means 50,000 in tax
A car costing 1000001 will be taxed at 8% which means 80000 in tax
So a mere 2rs increase in price leads to 30,000rs increase in tax, which is totally illogical.
The tax on cars should be slab based.
For example a car which costs 20 lakhs
5 lakh taxed at 5% = 5000
next 5L at 10% = 10,000
Next 5L at 15% = 15000
Next 5L at 20% = 20000
Total tax on a 20L car would be 50000rs

Car costing 499999 and 500001 will not have 5000rs tax difference due to 2rs price difference.

This is differential taxation system, not the totally mathematically illogical system all states have in place.
I agree that what you have pointed out may be theoretically valid but in practice that will lead to loss of revenue to the state.For eg a 20 lakh vehicle will yield Rs.3lakhs as road tax revenue to the state but as per the above mentioned system it will rake in only 50000 which is one fifth of the actual.Moreover some dealers did try to use this loophole and fixing the prices just below the slab (999990/-) and save Rs20000/- but this was detected by the MVD and the extra tax due levied.
This fallacy is there wherever there is a slab system (eg Income tax slabs)
That does not mean that the whole progressive slab system is faulty
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Old 7th June 2013, 17:41   #40
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Default Re: Soon, uniform road tax of 6% across all states

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Originally Posted by ajay99 View Post
I agree that what you have pointed out may be theoretically valid but in practice that will lead to loss of revenue to the state.For eg a 20 lakh vehicle will yield Rs.3lakhs as road tax revenue to the state but as per the above mentioned system it will rake in only 50000 which is one fifth of the actual.Moreover some dealers did try to use this loophole and fixing the prices just below the slab (999990/-) and save Rs20000/- but this was detected by the MVD and the extra tax due levied.
This fallacy is there wherever there is a slab system (eg Income tax slabs)
That does not mean that the whole progressive slab system is faulty
With the slab system this loophole cannot exist. The loophole exists with the current system where a 1rs price increase can lead to 50,000rs tax difference, so pricing is done at 999999
That is why income tax system is slab system
Otherwise for imagine 10% for <10L and 20% for >10L would mean
If your salary is 999999 you would pay 1L in tax
If your salary is 2rs more you will pay 2L in tax. So after salary hike your take home will decrease.
To plug such silliness income tax department works on slab system worldwide. To not have slab system for Road tax is illogical. If you can see some logic in not having a slab system like income tax, please enlighten.
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Old 7th June 2013, 18:02   #41
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Default Re: Soon, uniform road tax of 6% across all states

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Originally Posted by tsk1979 View Post
With the slab system this loophole cannot exist. The loophole exists with the current system where a 1rs price increase can lead to 50,000rs tax difference, so pricing is done at 999999
That is why income tax system is slab system
Otherwise for imagine 10% for <10L and 20% for >10L would mean
If your salary is 999999 you would pay 1L in tax
If your salary is 2rs more you will pay 2L in tax. So after salary hike your take home will decrease.
To plug such silliness income tax department works on slab system worldwide. To not have slab system for Road tax is illogical. If you can see some logic in not having a slab system like income tax, please enlighten.
The Income tax slab system can also have this same fallacy.
For example upto Rs.499999/- you need not file returns for an additional 2 Rs you have to file returns.
2 years back Surcharge of 10 percent was there for taxable income above Rs.10lakhs so for an excess Rs2 one ended up paying Rs.15000/-
so not only in road tax even in income tax that fallacy is there
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Old 7th June 2013, 19:49   #42
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Default Re: Soon, uniform road tax of 6% across all states

Great news actually.

It would be quiet interesting to see the trend followed in DELHI NCR (Gurgaon and Noida) after this is implemented.

I believe the current Road tax in Delhi, Noida, Gurgaon is 12%, 8% and 6% respectively.
As of now, most of the residents in Delhi and Noida are getting their vehicles registered in Haryana some way or the other.
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Old 7th June 2013, 23:35   #43
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Post Re: Soon, uniform road tax of 6% across all states

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Originally Posted by byomjeet View Post
Like many other countries, in India also, the Government needs to think about levying the Road Tax (RT) along with the fuel. The road tax can be the part of the other taxes levied on petrol/diesel/CNG/LPG.
A very good idea. Instead of paying Road tax upfront, we will shift to pay-as-you-use model.

Why it may not work ?

a) Government gets a large sum of money beforehand in terms of Road Tax, a part of the government''s revenue. Why would they forsake this revenue?
b) How would road tax for electric vehicles / solar powered (when they come) vehicles be levied?
c) Commercial players may end up paying disproportionate amount of road tax.
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Old 8th June 2013, 11:22   #44
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Default Re: Soon, uniform road tax of 6% across all states

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Originally Posted by byomjeet View Post
Like many other countries, in India also, the Government needs to think about levying the Road Tax (RT) along with the fuel. The road tax can be the part of the other taxes levied on petrol/diesel/CNG/LPG.

Yes, the road tax is a state subject and it should go to the State Government. The State Government will take its share of Road Tax from the overall sales of fuel, like they do in case of VAT.

There are many advantages of this scheme.

2. Wherever you go and run the car and fill fuel, you pay tax there, be it any state. So, if you are running the car in Tamilnadu, you have to fill fuel in Tamilnadu and pay the road tax to Tamilnadu Government. If you are bringing the car to Andhra Pradesh and running there then you have to fill fuel and Aandhra Pradesh and pay the road tax to Andhra Pradesh Government.

3. The more I run the car, the more I use the road and the more I pay the road tax.

But in this case, the road tax should be uniform in all the state.

You comments are solicited.
This is the best idea i have ever heard about road tax! After all it should be charged only when one uses the road. And to use the road, one definitely requires fuel in their car.
As others have said, it will increase the prices of fuel(which are already very tax heavy ). But think about it and you will feel it is better. You won't have to pay road tax upfront while buying the car. This money if invested properly will yield us a return which would be enough to pay the increase in fuel prices and our capital will still be ours! Right now we pay road tax for 15 years or even lifetime whereas most of us sell the cars within 5-7 years. So if this system is implemented, we will only pay the taxes for the time period we use the car
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Old 8th June 2013, 15:11   #45
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Default Re: Soon, uniform road tax of 6% across all states

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Originally Posted by amansanc View Post
This is the best idea i have ever heard about road tax! After all it should be charged only when one uses the road. And to use the road, one definitely requires fuel in their car.
As others have said, it will increase the prices of fuel(which are already very tax heavy ). But think about it and you will feel it is better. You won't have to pay road tax upfront while buying the car. This money if invested properly will yield us a return which would be enough to pay the increase in fuel prices and our capital will still be ours! Right now we pay road tax for 15 years or even lifetime whereas most of us sell the cars within 5-7 years. So if this system is implemented, we will only pay the taxes for the time period we use the car
So true amansanc. You have given yet another dimension to it. I had never thought about the one time expenses part of it. Good. Thanks.
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