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Old 17th May 2014, 22:45   #31
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Default Re: Road Tax: Fixed rate per model (independent of trim level)?

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Originally Posted by GTO View Post
Road tax is for the lifetime of the car.

It's the registration that is valid for only 15 years. When you enter the 16th year, you get the registration renewed (basically RTO wants to know if your car is fit enough) and pay green tax (as a 15 year old car won't run as clean or have new emission tech). AFAIK, you don't pay road tax again.
Ok but still why should the owner pay road tax for the lifetime when he keeps the car for only 3-5-7 years? Why even pay registration for 15 years when I use the car for max 5-7 years. Making annual payments will not only be logical & simple but also affordable enabling many people to upgrade to a higher variant or more expensive brand.
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Old 17th May 2014, 23:11   #32
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Default Re: Road Tax: Fixed rate per model (independent of trim level)?

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Ok but still why should the owner pay road tax for the lifetime when he keeps the car for only 3-5-7 years?
Amit, you have a valid point but as per the motor vehicle norms in India 15 years is the defined limit which is followed till date and probably won't change in near future. Your question wont find a close ended answer.

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Making annual payments will not only be logical & simple but also affordable enabling many people to upgrade to a higher variant or more expensive brand.
The idea is far-fetched. In one year the car's value gets depreciated then how can one keep on paying the fixed amount of road tax ?

Also, the RTO's will have an issue on calculating the tax based on depreciation which shall further lead to wastage of time for the owner as well as the official.

Once I interacted with an RTO regarding vehicle transfer from one state to another, He said based on the actual vehicle cost of 2005 you need to pay the road tax again. He gave me an estimate of 40K where as the car itself was not more than 65K. I know it is irritating but the agencies abide by the defined rules.

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Old 18th May 2014, 11:09   #33
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Quote:
Originally Posted by amit View Post
Ok but still why should the owner pay road tax for the lifetime when he keeps the car for only 3-5-7 years? Why even pay registration for 15 years when I use the car for max 5-7 years. Making annual payments will not only be logical & simple but also affordable enabling many people to upgrade to a higher variant or more expensive brand.

Annual payments involve far more processing cost, and are also much easier to evade / tougher to collect. The shift to OTT was driven by the fact that road tax bills were easily evaded in the past. And if you sell your car after 5-7 years, the buyer will pay you the NPV of the road tax that would have been payable by him over the next 8-10 years, so conceptually you don't lose. Buying a more expensive brand when you need to make an annual payment of road tax is a classic example of a money fallacy - you could always achieve that through financing.

The problem arises where people shift residence from one state to another - since getting refunds for road tax paid from the old state is tough and you have to pay road tax in the new state. Further, while cars depreciate on in a written down value method (in fact with a decreasing rate of depreciation), the government charges road tax in a straight line manner - so the tax payable in a new state on a 3-4 year old car is much more than that leviable based on its actual value. If we got a straight GST type offset wherein you pay tax on residual life in the new state only on the difference between the tax rate in the new state and original state, this would be fine.
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Old 18th May 2014, 19:02   #34
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Default Re: Road Tax: Fixed rate per model (independent of trim level)?

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Originally Posted by rohan_iitr View Post
Why can't these safety features be optional across all trim levels ? I would be happy to buy a base variant with safety pack at an additional price of 50k, rather than having to cough up 2 lakhs extra for the highest trim
The answers lies in your statement. Car manufacturers want you to opt for higher trim levels as that's where the highest margin is. Base model price is kept low to lure buyer in and then they are compelled to upgrade if they are looking for specific features e.g. safety.
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Old 18th May 2014, 19:38   #35
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Default Re: Road Tax: Fixed rate per model (independent of trim level)?

The hassle of annual payments in the most corrupt office the RTO was a good riddance.
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Old 19th May 2014, 07:49   #36
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One thing I'd greatly appreciate is if the RTO can figure out the option of providing state licence plates without the payment of taxes. Once I've paid a life time tax, I am not sure why I should go around collecting remaining dues from the old state while I move to another. I should be able to get the local state plates by paying a nominal amount for processing charges instead of having to pay local road tax again and then claim the old one. I remember in the US it was like that. Very simple and effective.
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Old 19th May 2014, 12:17   #37
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Default Re: Road Tax: Fixed rate per model (independent of trim level)?

With recent crash tests, safety awareness, I guess we can at least put this topic as a point to be considered.

In order that higher spec models get a consideration in 'very' price sensitive market, keeping tax across specs constant will be a good booster. Nice thought !
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Old 19th May 2014, 14:07   #38
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Default Re: Road Tax: Fixed rate per model (independent of trim level)?

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Originally Posted by rohan_iitr View Post

I feel it is unfair of the RTO to tax customers for these additional features, especially for the safety features such as fog lamps, rear washer/wiper, ABS and airbags.


How does it matter to the RTO whether a car comes with factory fitted power windows, audio system, leather seats etc ? Why is the RTO taxing us additionally for these features ?
Sadly that is how our system works.

This is exactly the same reason why many sales executives (especially Maruti & Hyundai) advice first time, budget conscious car buyers to go for the base variant and then add everything as after-market extra fittings, to reduce the road tax burden.

On a similar note, many times I have felt that there should be some road tax concession/incentive to those users who use the roads less frequently, thereby helping in avoiding congestion, reducing pollution, reducing road damage etc.

It may be given as a discount in the next tax renewal cycle of that vehicle, or it may also be allowed to be transferred to the next vehicle of that owner, like Insurance NCB.

I have an uncle who has a 2012 Dzire VDI which has not clocked even 5000 kms until now. I often wonder how much money he has wasted as road tax!

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Originally Posted by scopriobharath View Post
Really ?

When there is tax for clothing, shelter, Water and food, i really doubt govt would not tax Airbags / ABS and other luxury features.

Car is considered to be a super-luxury item according to govt (Even a basic M800)
But then, that is what sales tax is for, right? Just like food & clothing, the owner has already payed the sales tax for the ABS & airbag as part of the car cost, at the time of purchase itself.Then why should the government extract the extra amount for these features as part of road tax too? As the OP pointed out, how do these features make any difference to the road usage by that user?

Last edited by VinodDevil81 : 19th May 2014 at 14:14.
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Old 19th May 2014, 14:38   #39
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Default Re: Road Tax: Fixed rate per model (independent of trim level)?

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Originally Posted by VinodDevil81 View Post

But then, that is what sales tax is for, right? Just like food & clothing, the owner has already payed the sales tax for the ABS & airbag as part of the car cost, at the time of purchase itself.Then why should the government extract the extra amount for these features as part of road tax too? As the OP pointed out, how do these features make any difference to the road usage by that user?
It is difficult to enforce fairness in tax collection. To ensure fairness to each and every individual who pays tax, you have to make one rule each for each person. Tax laws are simplified so that it is easy to define and enforce. Already there are too many rules plugging too many things that are identified as "unfair". You can't fix everything. Too may rules and complexities lead to corruption.

Here, in this case, having a flat 10% tax is simple. Making a slab system makes it slightly more complex. Bringing in slabs based on variants makes it even more complex. There is no end to the fairness you can bring to the system, but at the end it will become an unmanageable mess.

What we need is even simpler rules/laws.
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Old 19th May 2014, 19:28   #40
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Default Re: Road Tax: Fixed rate per model (independent of trim level)?

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Originally Posted by VinodDevil81 View Post
But then, that is what sales tax is for, right? Just like food & clothing, the owner has already payed the sales tax for the ABS & airbag as part of the car cost, at the time of purchase itself.Then why should the government extract the extra amount for these features as part of road tax too? As the OP pointed out, how do these features make any difference to the road usage by that user?
It can be atributed in two ways. Supposedly the Govt feels that the ABS/Airbag adds to the weight of the vehicle so it might damage roads compared to a lesser loaded vehicle.

OR

"if you can afford more, pay us more" then concept. We all know that all the road tax we pay does NOT go into road development. We all know where it goes
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Old 19th May 2014, 20:19   #41
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Default Re: Road Tax: Fixed rate per model (independent of trim level)?

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Originally Posted by scopriobharath View Post
Supposedly the Govt feels that the ABS/Airbag adds to the weight of the vehicle so it might damage roads compared to a lesser loaded vehicle.
This thought is the weirdest and funniest I have come across so far. Govt's think tanks are actually very much aware of the built quality of the cars these days so weight is not a issue. Even a Fortuner or a Scorpio can go for a somersault at high speeds as they have a high center of gravity irrespective of whether it's a highway or a pot-holed road.

Secondly, If we consider the entire car's weight then I don't think that an ABS device or an Airbag may lead to significant rise in car's weight. Hence, this logic of charging as per safety device is not in a reasonable perspective in my opinion.

Therefore, the first thing agencies need to think about is to how can they make things better from their end viz-a-viz improve the road infrastructure instead of cooking up such jokes.

Quote:
"if you can afford more, pay us more" then concept.
Even worse, We all are able to afford a lot of things so this does not make us liable to get taxed for everything we may afford to buy.

Quote:
We all know that all the road tax we pay does NOT go into road development. We all know where it goes
That's the apathy!

If we go by the views of your post then the govt. seems to be in a win-win situation under all circumstances.

The car has ABS/EBD et al you pay more because of the On Road Price due to safety or The car is a Fortuner/ Scorpio or XUV 500 you still pay more as it's heavier for the road.

Instead of all this, I wish the agencies would been more thoughtful about the citizen's safety and planned their actions accordingly.

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Last edited by Aditya : 27th May 2014 at 12:33. Reason: Correcting typo
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Old 22nd May 2014, 16:59   #42
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Default Re: Road Tax: Fixed rate per model (independent of trim level)?

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Originally Posted by Hayek View Post
Road tax is meant to provide funds for road maintenance and repairs, and should logically be based on the damage the vehicle causes to road infrastructure - viz it should be directly linked to the weight of the car and perhaps it's footprint, and not to its value. The junk Boleros cause far more damage to roads than Porsche 911s - the road tax on them should be higher.

Perhaps a case for a PIL. Unfortunately, our socialist minded judges are unlikely to accept this logic.
This appears to be the main intention of road tax. But the complexity is in how to estimate the damage to roads? Load exerted on the road (Weight/foot print) could be one factor, but it also depends on distance travelled. What about the type of tyres? Does road-rollers cause damage or repair the roads? What about bullock carts - they cause more damage but they are owned by poor people. Do off-roaders need to pay road tax? If I prove I am buying a car purely for exhibition and not travel, can I avoid road tax? and so on ad nauseum...

But we have to understand that taxation never stands test of absolute fairness and it is not even supposed to. A workable solution is more important from implementation than one that tends to be fair but very complex to implement.

Indian taxation system and even the costing of utilities are regulatory in nature, because the supplies are limited. For example electricity/water/telephone unit rates increased with volume, not decrease. It is not considered a "business" and in cases subsidized, so the rates are to discourage the consumption, or cross subsidize the poor by the rich. I think the road tax is quite similar logic, to regulate the usage and also cross subsidize and so instead of going to complexity of defining the basis for usage/damage, it is to regulate and cross subsidize?

It is natural logic that this stems from the socialistic ideology, but the fact that this is quite similar in all capitalistic countries baffles such logic.

My five paise.
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Old 22nd May 2014, 19:16   #43
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Default Re: Road Tax: Fixed rate per model (independent of trim level)?

Quote:
Originally Posted by GTO View Post
Road tax is for the lifetime of the car.

It's the registration that is valid for only 15 years. When you enter the 16th year, you get the registration renewed (basically RTO wants to know if your car is fit enough) and pay green tax (as a 15 year old car won't run as clean or have new emission tech). AFAIK, you don't pay road tax again.
RTO folks in Kerala seems to have come up with some scheme to collect road tax for every 5 years along with registration renewal for vehicles older than 15 years. We have to pay the tax till the expiry of next registration renewal. Had to pay a tax of 1.3k for my dad's 30-year old bike and ~10k for my uncle's 15-year old Zen earlier this month. This is a recent development since it was not the case last year when we paid the 2-year tax for my Zen.

I'm not sure if it is applicable only for vehicles which are not on lifetime tax mode since the first set of cars that paid lifetime tax in Kerala are yet to reach the 15 year milestone though it is just a couple of months away. In case of older vehicles, tax used to be collected for 2 years but now they have increased the slabs to 5 years to coincide with the registration renewal. Based on what we heard while at the RTO office, even the lifetime tax is only for the period of initial registration which is 15 years.

Last edited by zenren : 22nd May 2014 at 19:20.
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Old 22nd May 2014, 21:35   #44
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Default Re: Road Tax: Fixed rate per model (independent of trim level)?

Its about time that they get in the tax model based on emissions.

Possibly modify it to tax transport vehicles every 5 years based on their emission results.
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Old 22nd May 2014, 22:12   #45
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Default Re: Road Tax: Fixed rate per model (independent of trim level)?

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Originally Posted by vinaydas View Post
Its about time that they get in the tax model based on emissions.

Possibly modify it to tax transport vehicles every 5 years based on their emission results.
Vinay, If such an alteration is implemented then the commercial vehicle owners will be at loss because in India commercial vehicles are known for disobeying the emission rules. You may have seen BPO cabs which have been instrumental in increasing pollution levels. Adding to this is the fact that commercial vehicle owners are liable to pay tax on entering into a new state too. So overall it will be added pressure upon them.

Secondly, I do not think that 5 year span based on emission norms is correct because neither the commercial nor the private owners keep the vehicle for 5 years and in case the owner sells the vehicle before 5 year span then based on the suggested alteration the new owner will be liable to re-pay the road tax again after the completion of duration which will gradually lead to rotting of 2nd owner vehicles.

Hence, in my view the present norm of 15 years is the best and the best part of the suggested alteration in road tax would be decline in pollution.

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