[Leoshashi]

Guys, any idea what this new rule is? Apparently, if someone has a car registered in his name, and wishes to own a second car, then he/she has to pay higher taxes, compared to the first time owner. This is what the SA told me, and it has been in place since last month.

Is this state(Jharkhand) specific or has it been implemented pan India??

[saket77]

Originally Posted by Leoshashi

Guys, any idea what this new rule is? Apparently, if someone has a car registered in his name, and wishes to own a second car, then he/she has to pay higher taxes, compared to the first time owner. This is what the SA told me, and it has been in place since last month.

Is this state(Jharkhand) specific or has it been implemented pan India.

Road taxes are always state specific, as of now. This is a new rule in JH which I should have ideally updated here but couldn't due to work pressure due to the closing FY.

Pointers:

1. The roaD taxes has been increased to 6% from previous 3% a few days ago.

2. Additional 3% to be levied on second car purchase in name of one owner.

3. Also, 3% additional tax on a vehicle purchase costing more than 15 lacs.

So, if your second car costs more than 15 lacs, then you shall pay 12% tax. For any second car (less than 15 lacs), you pay 9%. For new first car, now you pay 6% against the previous rate of 3%

Regards,
Saket.

[ashis89]

Originally Posted by Leoshashi

Guys, any idea what this new rule is?
Is this state(Jharkhand) specific or has it been implemented pan India??

Originally Posted by saket77

Road taxes are always state specific, as of now. This is a new rule in JH which I should have ideally updated here but couldn't due to work pressure due to the closing FY.

A similar rule exists in Telangana as well. However instead of car, you have to pay a higher tax (additional 3% probably) even if you own a two-wheeler in your name.

[GTO]

Thanks for sharing, Leoshashi! Moving your post to a new thread.

[centaur]

A move that is definitely appreciated but this needs to flow to cities overflowing with cars too. Also, they need to ensure that the person on whose name the vehicle is being purchased, has a valid license too else what stops a person from buying a car in the name of each member in the house? It is still technically that person's first car and they can get away with lower taxes

[//M]

Yes this new tax structure has come into play since 1st Feb 2019.

A dear friend who took delivery of his new Jeep Compass last week from Jeep Ranchi had to cough up 12% road tax. He was kicking himself for delaying the purchase as he had already made up his mind to get the Compass long back but still wanted to check the Harrier before final purchase.

The old tax structure of flat 3% was extremely mouth-watering for residents though.

[five46]

How is this rule tackled in exchange offer cases where it is the first of the customer and being exchanged for a new car?

Because, he/she will end up having one car only.

[rovingeye]

What's to stop people from registering the second car in their spouse's name to avoid paying this tax?

[tazmaan]

Originally Posted by centaur

A move that is definitely appreciated but this needs to flow to cities overflowing with cars too. Also, they need to ensure that the person on whose name the vehicle is being purchased, has a valid license too else what stops a person from buying a car in the name of each member in the house? It is still technically that person's first car and they can get away with lower taxes

Why cannot a person not having a driving license own a new car? There can be several reasons where people do not have a license but have a car which is driven by a driver. Reasons can be old age, disability or simple phobia of self driving. My mom at here old age needs a car everyday and has a full time driver.

Asset buying capability can be and is being linked to income of that person. If that person on paper can prove he/she can afford a car there is no reason to burden them with higher taxes.

[ashis89]

Originally Posted by five46

How is this rule tackled in exchange offer cases where it is the first of the customer and being exchanged for a new car?

Because, he/she will end up having one car only.

Here in Telangana, the dealers help transfer the ownership of the old car first and then register the new car in the owner's name.

Originally Posted by rovingeye

What's to stop people from registering the second car in their spouse's name to avoid paying this tax?

Originally Posted by centaur

--SNIP--
a person from buying a car in the name of each member in the house? It is still technically that person's first car and they can get away with lower taxes

My colleague did this and bought his car in his wife's name, to avoid the extra tax as he had scooter registered in his name. However some companies give incentives to employees having a car. To avail this benefit, employee needs to have a car in his/her name. This could be a possible issue if someone is planning to register a car in spouse's name.

An interesting story around this law that I would like to share. Two of my friends (A and B) got new cars here in Hyderabad. Both used to own a bike each in their name. When A first decided to buy a car, the dealer's RTO agent suggested that he transfer the existing bike ownership to a friend's name. So B got the ownership of A's bike. When B decided to get a car, he transferred the ownership of both the bikes to A's name before buying the car. In the end, both saved some money even after accounting for the transfer costs of the bikes. Even on this date, A owns 1 car and 2 bikes in his name.

Also from what I got to know from them, this rule applies only if you are buying a new car/bike in your name and not to any used vehicle purchase. Hence the above workaround was successful.

[centaur]

Originally Posted by tazmaan

Why cannot a person not having a driving license own a new car? There can be several reasons where people do not have a license but have a car which is driven by a driver. Reasons can be old age, disability or simple phobia of self driving. My mom at here old age needs a car everyday and has a full time driver.
.

Agree. I missed that aspect for some reason. In that case I really doubt how much this would help and deter people from buying the second car.

[G V Krishna]

My two cents on this topic:

• In Telangana, one has to submit their PAN card while registering the vehicle and the search for an existing vehicle is done on the PAN number. You should pay 2% (on the invoice amount?) along with the application in RTA office if your PAN number shows up an existing vehicle.

• This tax (12% or 14% as the case may be) is levied even on the discount given by the dealers/company.

I would say the correct term for these kind of taxes should be 'Robin Hood Taxes'. I haven't seen any document or White-Paper that elaborates how these extra taxes were utilized to improvise either the Road Infrastructure or the Public Transport. I guess, all this money goes to the Mass appeasement schemes which all of us know how 'effectively' will be implemented.

[drmohitg]

If only these taxes could act as a deterrent against buying multiple cars. What is an extra few thousands for most car buyers. It is just one of those easy to earn money policies that our governments love to introduce. Over the last decade, car buying in tier 1 cities or atleast the metro cities has definitely changed. There are more and more people who are opting for B segment and beyond cars as their first purchase and not necessarily opt for an entry level segment car. Would these buyers really mind paying extra? Ofcourse the option of registering them in someone else's name is also an option that most people will resort to. After all in our country, people register properties costing much more in a stranger's name ( so called benami properties).

[sreeharipv]

I'm all for taxing the rich higher. But in this particular case, there's an interesting flaw. More often than not, if I have two cars in my name, I'll only drive one of them at a time and will split my mileage (and hence road use) between the two. Hence I'm paying twice as much road tax for more or less the same number of miles I was using the road infrastructure before even if the road tax was the same (percentage-wise) for the second car.

This is just an interesting logic. This may not be true in a lot of cases in India as the head of family might be owning multiple vehicles which is being used by other members of family. Nevertheless, interesting to think about.

Actually, how about scraping the road tax entirely and add the equivalent of that as a component of fuel tax. So people get charged in accordance to their actual usage?

[RedTerrano]

Interesting discussion. As far as I can see, it seems to be focused on taxation (and ways to avoid it!!)

Lets take a step back and think why people end up buying multiple vehicles? Would anyone go for it, if the safe, reliable and comfortable public transport existed? How many Indian cities have such service in place as we speak? I am a Pune resident and I can vouch for total absence of it here.

What is the official explanation for the extra taxation? Rich = bad, so tax them?
What about the poor who get employment directly (vehicle factory) or indirectly (mechanics, spare parts) with each second vehicle purchased?