[johannskaria]

It all began with ruling party leader travelling in a PY registered open top Mini Cooper for a political rally. But has kicked up one of the most media covered tax evasion instances of the recent times. And has revealed names of several film stars, politicians and businessmen in the process.

The MVD has obtained the details of 1187 vehicles that were purchased in Kerala and registered in Puducherry. Those who own PY registered high-end cars include actor turned BJP MP Suresh Gopi, actors Amala Paul and Fahadh Faasil.

As per rules, a car registered in Puducherry will attract much lower tax rates than those in a state like Kerala. When Kerala charges 20% of the cost of the car as tax, Puducherry charges merely Rs 1.5 lakh as a one-time tax for any car above Rs 20 lakh

Mercedes S class car which costs more than a crore from a dealer registered in Puducherry paid only Rs 1.75 lakh as tax*for this purchase thus evading tax in the tune of Rs 20 lakh. An individual is charged Rs 50,000 by agents and officials for getting it done.

Now a four-member team from the Kerala Motor Vehicles Department has been sent to Puducherry to probe the evasion.

The Motor Vehicle Rules had a provision to register vehicles by providing proof of temporary residence. Using this provision, buyers of high end cars from other States registered their vehicle by providing their LIC policy as a temporary residential proof and availed the concessional Life Time Road Tax where the fancier the car the higher the tax benefit would be.
The provision in the rules was misused by several people from outside Union Territory to procure vehicles, especially high-end cars from here, said an official privy to the issue.

The Kerala Motor Vehicles Department had issued notice to owners whose cars were worth more than ₹10 lakh after the investigations carried out at all local luxury vehicle service centres.


The team from Kerala has started verifying the address and other documents submitted by the owners. During the verification process, it was found out that most of the addresses used for registering the vehicles were fake. Investigations revealed that addresses of permanent residents of Puducherry were used to register vehicles without their knowledge.

Even Puducherry Lieutenant Governor Kiran Bedi has reacted to this development, and asked senior officials in the Transport Department and police officials to take action.
“It has led to loss of revenue to Kerala and the Puducherry Transport Department authorities state that they know nothing about it. This must stop. I have directed the Transport Secretary, Transport Commissioner and SSP to take it up as a white collar crime,” Bedi told reporters on Monday.

According to the Central Motor Vehicles Act, if a vehicle is kept in another state for over six months, then the owner must get a new registration from the state it is being used and parked in. A no objection certificate will also have to be obtained from the UT/state where the vehicle was originally registered.
But the problem here is every state follows a different set of rules over penalties for those who fail to register their vehicles.
In Karnataka, for instance, if a vehicle with outside registration gets captured in the traffic monitoring cameras frequently for a period of six months then it is the owner's responsibility to prove that he is not a permanent resident who had registered his vehicle outside to evade tax.
In Tamil Nadu, temporary registration certificates are valid only for a month from the date of issue and cannot be renewed. Continued plying of vehicle leads to trouble with the police and fines.
The Kerala Motor Vehicle Taxation Act however is reportedly liberal and does not provide for penal interest. What officials can do at best is to recover the original tax without any fines.

[sudev]

One nation one tax is sorely needed here.

There are support arguments for both side of fence. End of day equality of tax is only solution.

If you register a company there and the car is "allotted" to you for use there is nothing any tax authority can do. The permanent address remains so no need to get changes done. On other hand there are instances of genuine requirement of shifting by professionals transferred from place to place. They end up being harassed. Even after one year of moving within the same state still all my "documents" have not been updated to new city address. Authorities expect us to update registration based on address proof in six months.

[SILVERWOOD]

Back in the 60s when the Ambassador was the only brand of car available in the market, there used to be a scarcity of cars in Kerala, owing to the high demand. And there were 'agents' who supplied vehicles from Puducherry to buyers here. Not only were the registration charges a miniscule of that in Kerala, the cars themselves came at a cheaper price. The buyers would pay the Kerala prices while the agents would pocket the difference.

I have attached the Life Time Tax structure of Pondichery as well.

https://timesofindia.indiatimes.com/...w/61644946.cms