Road Tax – Rules and Regulations You Should Know About

When you purchase a new vehicle in India, whether it is a bike or a car, the auto dealer provides a detailed break-up of all the costs associated with the purchase. One of the most significant components of the final value of the vehicle is its on-road price. The on-road price is the actual final value of the vehicle, excluding the cost of accessories, but including the cost required to drive the vehicle on Indian roads. Road tax is a compulsory tax that all vehicle owners must pay. There are various rules and regulations regarding road tax that every vehicle owner should be aware of. Let’s delve into the essentials of road tax in India.

What is Road Tax?

Road tax refers to the tax levied on all vehicles. All vehicle owners must pay this tax before using their vehicle on public roads. Since this tax is imposed by state governments individually, road tax is essentially a state-level task. The rules and regulations of road tax differ from state to state, and the amount charged as tax varies accordingly. Additionally, the road tax amount also depends on the type of vehicle you purchase. As per the Central Motor Vehicles Act, car owners must pay the entire road tax amount upfront if the vehicle is used for over a year.

Road Tax Authorities

Road tax in India is levied by two chief governing authorities:

The State Government

State governments levy annual or lifetime motor vehicles tax. They also impose other taxes related to the use of public roads, which include:

  • Passenger and Goods Tax
  • Toll Tax
  • Value Added Taxes (VAT)

The Central Government

The Central Government charges various miscellaneous taxes related to the use of vehicles on public roads, such as:

  • Customs Duty Taxes
  • Central Excise Taxes
  • Central Sales Taxes
  • Goods and Services Tax (GST)
  • Additional Cess based on the type and model of the vehicle

The government levies road tax on all two, four, and multi-axle vehicles used for commercial and private purposes.

Why is Road Tax a State-Level Tax?

State governments are responsible for the maintenance and construction of approximately 80% of the roads in the country. It is the individual state that bears the cost of construction and road maintenance. As a result, state governments are authorized to determine road tax rules and regulations and impose taxes accordingly.

Road Tax Rules and Regulations, Calculation Factors, and Payment

Based on the vehicle’s ex-showroom price, road taxes are paid by new vehicle owners. The road tax amount is calculated based on several factors, such as:

  • The Vehicle’s Engine Capacity
  • The Vehicle’s Seating Capacity
  • The Vehicle’s Age
  • The Vehicle’s Weight

Depending on the requirements of the state in which you purchase the vehicle, road tax in India can be paid as a lump sum amount or annually. Road taxes need to be paid at the Regional Transport Office (RTO).

Rules for Transferring a Vehicle from One State to Another

Even if you pay a lifetime road tax in one state, if you need to use the vehicle in another state (e.g., if you move to a different state), you need to re-register your vehicle and pay road taxes according to the terms of the new state.

Road Tax Payment Methods

Road tax can be paid both offline and online.

Offline Payment of Tax

When you purchase a vehicle for the first time, the auto dealership typically handles the initial road tax payment, collecting it from the buyer at the time of purchase. Once the validity of the initial payment ends, the vehicle owner can visit the nearest RTO, fill out the tax form, and pay the tax amount via cash or demand draft. The owner must submit photocopies of their vehicle registration documents, vehicle insurance papers, purchase invoice, and address proof.

Online Payment of Tax

You can visit the state transport department’s website to pay road tax online in India. You will need to enter details such as your vehicle registration number and chassis number. Then, you can select the mode of payment and complete the tax payment process.

Frequently Asked Questions (FAQ)

1. What happens if I don’t pay road tax?

If you fail to pay the road tax, you may face penalties, fines, and legal action. Additionally, your vehicle can be impounded by the authorities.

2. Is road tax refundable if I sell my vehicle?

Road tax is generally not refundable if you sell your vehicle. However, in some cases, if you transfer your vehicle to another state, you might be eligible for a partial refund. This process varies by state.

3. Do electric vehicles have to pay road tax?

In many states, electric vehicles are either exempt from road tax or have a reduced road tax rate to encourage the use of environmentally friendly vehicles. Check with your local RTO for specific details.

4. Can I pay road tax in installments?

Road tax is typically paid as a lump sum amount. However, some states may allow for annual payments. It’s best to consult with your local RTO for options available in your state.

5. How do I calculate my road tax?

Road tax is calculated based on the ex-showroom price of the vehicle, engine capacity, vehicle age, weight, and seating capacity. Different states have different calculation methods, so it is advisable to use the road tax calculator available on your state’s transport department website.

6. What documents are required for road tax payment?

To pay road tax, you generally need the vehicle’s registration documents, insurance papers, purchase invoice, and address proof. For specific requirements, check with your local RTO.

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