Govt suggests three tax brackets under uniform road tax; highest up to 12%: Report

1 / 1

Govt suggests three tax brackets under uniform road tax; highest up to 12%: Report

The union road transport ministry has suggested that road tax across the country should be charged at the highest of 12 per cent. The new road tax rates were proposed under the concept of 'One Nation-One Tax'.

The union road transport ministry has suggested that road tax across the country should be charged at the highest of 12 per cent. The new road tax rates were proposed under the concept of 'One Nation-One Tax'.

The ministry has proposed three tax brackets related to the price of the vehicle, a report by the Moneycontrol said. As per the ministry's proposal, vehicles priced below Rs 10 lakh will attract road tax at the rate of 8 per cent, and those that cost between Rs 10 lakh to Rs 20 lakh will be placed in the 10 per cent road tax. The vehicles that cost more than Rs 20 lakh will have to pay 12 per cent road tax.

Back in April, a ministerial group on transport had suggested a uniform road tax for all states as a way to put an end to tax evasion. Called the 'One Nation-One Tax' initiative, it was fashioned after the uniform indirect tax regime, Good and Services Tax. "Uniform tax rate will put a check on people registering their vehicles in low tax rate states and running them in other states," said a statement by the road transport ministry.

The suggested changes in road tax rates will come into effect after Rajya Sabha passes the Motor Vehicles (Amendment) Bill, 2016. According to the report, the standing committee has also suggested the same tax structure as the road transport ministry to be incorporated in the Motor Vehicles Act.

While the proposed road tax structure is expected to make buying cars cheaper in states like Maharashtra and Karnataka, it is likely to make vehicles costlier in areas like the national capital, Delhi.