State to increase one time vehicle tax by 2 per cent

ST Correspondent
Tuesday, 4 July 2017

Mumbai: Prices of some cars and two-wheelers fell after the unified implementation of indirect tax regime that is Goods and Service Tax (GST). But, there is a bad news for the car buyers, as the government decided to increase the one time vehicle tax by 2 per cent to compensate the revenue loss arising out of imposition of GST. That will generate about Rs 700 crore to Rs 750 crore every year.

Mumbai: Prices of some cars and two-wheelers fell after the unified implementation of indirect tax regime that is Goods and Service Tax (GST). But, there is a bad news for the car buyers, as the government decided to increase the one time vehicle tax by 2 per cent to compensate the revenue loss arising out of imposition of GST. That will generate about Rs 700 crore to Rs 750 crore every year.

The State cabinet on Monday decided to hike one time motor vehicle tax by 2 per cent. The hike would badly hit the people who have intended to purchase a motor vehicle in the State. The rolling out of the GST has abolished the revenue through octroi and LBT, which forced the State to take this move.

An officer said that the government is going to lose annually around Rs 7,000 crore including Rs 300 crore collected from octroi through the Brihanmumbai Municipal Corporation (BMC) due to the abolition of the Octroi and LBT. 

Now, the government will have to tap sources to generate revenue and the cabinet decision on hike of the motor vehicle tax is one of the ways to compensate the loss of revenue. 

According to Transport Minister Diwakar Raote, the revenue collection would be decreased, hence it would need to be compensated. The revenue would go down by Rs 300 crore in Mumbai and Rs 400 crore in rest of the State due to the GST. This revenue was collected from the vehicle taxes. As one of the measures to increase the revenue, the motor vehicle tax will be increased,” said Raote. 

According to the Maharashtra Motor Vehicles Act-1958, at the time of registration, one time tax of the motor vehicle is being collected. 9 to 11 per cent tax has been levied on two-wheelers and three-wheelers at present. After this decision, the tax would be 10 to 12 per cent on these vehicles. The tax on petrol vehicles will be 9-11 per cent to 11-13 per cent.

The tax on diesel vehicles will be 11-13 per cent to 13-15 per cent. The tax on CNG vehicles or LPG vehicles will be 7-9 per cent from 5-7 per cent. 

According to the official from transport department, “High-end imported vehicles are being registered out of the State and used in Maharashtra leading to the loss of revenue in the State’s coffers. To avoid such things, the government has decided to put an upper cap of tax Rs 20 lakh on the high end vehicles.” According to data, every year, about 17 lakh two-wheelers are registered in the State, while 3 lakh cars and other vehicles are registered in the State. 

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