Wednesday, November 16, 2011

Road Tax on Vehicles- Need to relook

Road Tax on Vehicles- Need to relook

In my honest opinion, the current Road Tax laws are one of the most flawed and outdated rules. The vehicle owners in states which have bad quality of roads end up paying through their noses for lifetime road tax, and do not get anything in return. Some states like Karnataka, Andhra Pradesh strictly implement the Road tax collection for outside vehicles, which is not very fair most of the times.(Given that they have already paid in their state of origin). This set me thinking, the ideal scenario would be as such:

1.The Central government needs to make a central RTO, instead of statewise RTOs. These would report to the ministry of Transport or the Central RTO (Like passport authority, Income tax etc). Vehicles can be registered in a central database with state specific registration numbers.
2. Collect central Lifetime road tax for vehicles, and let the vehicles ply seamlessly across states. Share in revenue to be passed on to the primary state of usage.
3. Option to the state to charge Road tax surcharge (Over and above Central Road tax) if the state wants higher revenue for using its roads.

4. Option to pay annual road tax at the time of purchase of vehicle. Just FYI, Road tax is charged for 15 years (this is considered the lifetime of the vehicle) If I plan to use the vehicle for 5 years, why am I losing out on the balance 10 years? Eg: The Road tax in Karnataka for a mid size sedan would be in the region of Rs.150000. This comes to Rs.10000 annually (150000/15 yrs). The initial capital cost of the vehicle comes down by Rs.140000. The other advantage is that the cost if deferred for the future years and you pay as per your actual ownership time. After all, we do pay insurance premium annually right, what will prevent us from paying Road tax annually?

I would like to invite suggestions from T-BHPians for this. Is there some thing we can do as a group, maybe approach SIAM/ AAI and make a representation?

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