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-   -   Maharashtra: Road tax on private vehicles hiked by 2% (https://www.team-bhp.com/forum/indian-car-scene/188369-maharashtra-road-tax-private-vehicles-hiked-2-a.html)

The Government of Maharashtra has approved a hike of 2% on the road tax paid during the one-time vehicle registration process. The hike is applicable on all private vehicles - two-wheelers as well as four-wheelers. As a measure to discourage registration of vehicles outside the state due to the high taxes, the state cabinet has also capped the maximum payable road tax at Rs. 20 lakh.

Prior to this taxation increment, petrol-powered cars attracted a road tax in the range of 9-11% based on the cost of the vehicle, while diesel vehicles attracted 11-13%. The applicable taxes have now been increased to 11-13% for petrol and 13-15% for diesel vehicles. The tax on two-wheelers has been increased from 8-10% to 10-12%. The increased tax rates will further be stacked up by the recently introduced 2% road safety cess.

This increase in road tax comes on the backdrop of the introduction of the Goods and Services Tax (GST) in the country from July 1, 2017. The state government claims that it will be losing around Rs. 700 crore as revenue from octroi and local body tax (LBT) on vehicles, as the two have been abolished. In order to compensate for this loss, the road tax rates have been hiked. The government is expecting to generate an annual revenue of Rs. 750 crore with the hike.

Source: ET Auto

So a hike of 2 percentage points is a 20% hike in the tax rate, right?

Does GST allow for such taxes to be changed locally? If so, then benefits would never be passed on to the end customer but just re arranged in different ways.

For examples where the GST is higher of course it will be a different story

I was thinking of the same thing. I suppose a decent amount of benefit that people would have got from the GST implementation would now somewhat be offset because of this. Might not be the entire amount but still would be a considerable amount.

That beats the entire exercise of bringing in GST...at least from the point of the consumer. The common man was not much concerned about simplification of filing tax returns by corporates, but for lower tax outgo.

And regarding the losses that states would incur due to abolition of such taxes, the Central Govt. is still in the process of drafting the rules to compensate those losses. It is just a matter of time that these losses will be compensated through CGST & SGST. On the other hand, obviously the increased road tax will not be rolled back once the compensation mechanism is in place!
Govt. had warned the corporates and private entities of profiteering from GST and I believe this step is just a way around doing the same by none other than the state itself.

Looks like consumers are all set to be duped sooner or later as any price reduction due to lower tax rate under GST will be mutilated by increase in the base price of the product itself, yet again...sigh!!

Regards,
Saket.

I think this has nothing to do with loss of revenue owing to GST as LBT and Octroi would be compensated by Center. Maharashtra finance is under huge stress because of various reason including the loan wavers and GST leaves them very little room to play with.

Read this news sometime back and now I can connect to this news.

Yes, I went through this piece too. However, that speaks of using "non-tax revenue" to counter the situation. But you never know.

Regards,
Saket

Exactly my thoughts!
The same concept is being implemented to the Petrol sold in Maharashtra as well. In the month of June, twice the OMCs reduced the prices by couple of Rupees, which was immediately offset by the hike in State level taxes.
The price of petrol in Delhi is somewhere around Rs.64, while in Maharashtra around Rs 74.

I think this is a big loop-hole allowed in the GST, where the state can add random taxes over and above GST . Another tax in entertainment industry levied by TN government is listed here http://indianexpress.com/article/ind...t-tax-4732835/

I think the central government should issue some guidelines, place some limits on the "extra" taxes the states can levy over and above GST. Otherwise there will be no point of the GST and over a period of next 10 years or so, we will be back to multiple taxes like GST, State Levy 1, State Cess on GST, etc

EDIT: This is explained well in this article
http://www.moneycontrol.com/news/bus...t-2318453.html

First the increase in VAT on petrol and now this. Maharashtra government seems to think that owning a vehicle means you can be squeezed with taxes till you bleed. There has to be some limit to the tax that a person pays overall (Direct+ Indirect). The way things are going makes no sense

Disgusting.

It is extremely difficult to contribute to this thread without making a political reference.

I hope there's at least some educated soul in the entire cabinet that realizes that continually increasing top line isn't going to guarantee a healthy bottom line.

We'll continue to pay taxes like idiots, the powers-that-be will find ways to leak them, those taxes won't get us any benefits anyway and then, rinse-repeat.

This is the state of affairs when the State and Central Govt. are the same; can't imagine the blame game and "remedial" measures taken if they weren't.

The biggest reason is corruption :)

I was quite sure it would come to this after gst. So went ahead and got my car in Apr-May though there were rumours of reduction in prices post-gst.

People who registered the cars yesterday are the lucky ones I guess. Its just a matter of time other state governments also follow suit.

Thank god that elections are just around the corner in Karnataka and government cannot risk public wrath. Otherwise it looked like a perfect opportunity to fill coffers of state on account on lower car prices due to GST.

Although in Maharashtra's case this is ostensibly to offset the loss of LBT, but I was expecting this. Since the ex-showroom has come down slightly, the road tax collection would also come down slightly, so, I was thinking, what stops the State Governments to increase the Road Tax % - and predictably it happened.

We finally have one tax rate across the country. The next logical step should be one road tax.

That plus the road tax is already so high. I still wouldn't be surprised if they do.

Man! That didn't take long. Guess there is no escaping taxes on taxes.

I was looking at the post GST pricing for cars across India and it was good to see MH prices so close to DL. Usually it swings very wide between these states due to Octroi. Sad it didn't last long.

Bollywood and politicians will be happy with the maximum cap for 20 lakh though.

@15% road tax for diesel vehicles, the price of the car has to be 1.33 crore or more to reach the cap of Rs. 20 lakhs. How many such vehicles are sold in the state and for people who can afford to buy such cars, can they not afford to pay more taxes?