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Maharashtra: Road tax on private vehicles hiked by 2%

The present tax rates in Maharashtra are 9 per cent and 11 per cent for petrol and diesel cars respectively – for cars up to 10 lakh rupees. As a measure to discourage registration of vehicles outside the state due to the high taxes, the state cabinet has also capped the maximum payable road tax at Rs. 20 lakh. “This was causing revenue loss to the state exchequer”, the official explained. For petrol vehicles, the tax which was originally 9-11 percent of auto value has now been increased from 11-13 per cent depending on the size of the auto. Maharashtra has already chose to increase the levy on vehicles by 2% to compensate for the absence of octroi, a state tax which has now been merged with GST.For the cars running on diesel, the registration tax was around 11-13 per cent, which has been increased to 13-15 per cent. The state government has held that since it will lose Rs 700 crore per annum on foregoing octroi and other local body taxes on vehicles under GST, it made a decision to hike the road tax which will generate an extra Rs 750 crore. Increase in road tax, which is outside GST and set by states, now stands to dampen the prospects. The tax on two-wheelers has been increased from 8-10% to 10-12%. There is already a 2% road safety cess on the tax collected at registration. “If a hefty tax is collected from auto buyers, the money can be used to strengthen our public transport system”, he said. Said A V Shenoy of Mumbai Vikas Samiti, “The increase in registration charges – which is the one-time road tax – will ensure that the government earns more revenue while at the same time, it may be a burden on new vehicle buyers”. He further stated that it was yet to be seen whether there will be any impact on vehicle buyers due to the new road tax hike. “And, if state governments start raising local levies, the price benefits coming in from GST for the consumer lessen or get nullified”. However, high-end vehicles costing more than Rs20 lakh have been kept out of the ambit of this hike.