Road Tax in India: A Detailed Guide
- Nimisha Panda
- 1 day ago
- 8 min read
A crucial component of car ownership in India is road tax, also known as motor vehicle tax, VAHAN tax, or Parivahan tax. Every vehicle owner is required to pay a certain amount in road tax at the time of purchasing a new vehicle, as per Section 39 of the Motor Vehicle Taxation Act 1988. The government uses this cash to maintain and upgrade the extensive road network's infrastructure and to supply necessities like road signs and illumination. The money raised provides emergency first aid and safety precautions when a driver is unable to avoid an accident while driving.
Table of Contents
What is Road Tax in India?
India is a vast nation with an extensive road system that links its states and the cities within them. Vehicles are subject to a road tax imposed by the government at the time of purchase to fund the building and upkeep of these roads. When buying a car in India, a person must pay this state-level tax. Since each state has its own set of laws and regulations about road taxes, road taxes differ from one another. Additionally, the government uses the road fee it collects to fund emergency services and public safety in the event of a traffic accident. Additionally, funds from the road tax enable the construction of traffic signals and road signs. In India, all vehicles, whether private or commercial, are subject to road tax.
Who Pays Road Tax in India?
Anybody who buys a car in India, whether it's a four-wheeler, two-wheeler, or something else entirely, has to pay road tax. According to the following car attributes, the road tax applies to the vehicle's ex-showroom price:
Engine capacity
Weight
Age
Fuel type
Seating capacity
Registration status
The vehicle's intended purpose, whether personal or business
Type of vehicle: two-wheeler, four-wheeler, industrial, and agricultural
Who Manages Road Tax in India?
From a larger standpoint, both the federal government and the states impose a road tax. It is essentially a state-level tax, though, because state governments bear the expense of maintaining municipal roadways. The following is how taxes get levied:
State Road Tax
It includes state VAT, toll tax, passenger and goods tax, and yearly or lifetime motor vehicle tax. The government of the state in which you own a car is the recipient of your road tax. By the regulations of the new state government, you must pay the vehicle road tax within a month of relocating to a different state.
Central Road Tax
Depending on the vehicle's model and class, this kind of tax may include central sales tax, GST, customs duty, central excise, and additional cess. Usually, this tax is a percentage of the car's ex-showroom price. It helps in road building and maintenance.
When is Road Tax Paid in India?
Road tax is often due at the relevant Regional Transport Office (RTO) at the time of vehicle registration. The vehicle's registration certificate, insurance documents, proof of identity, proof of address, and the purchase invoice are among the documents needed to pay road tax. A NOC from the RTO of the state where the vehicle was registered is necessary for re-registration. The state government has the option of collecting the road fee all at once or charging annually. However, if you bought a car in one state and paid the entire amount at once, then used it permanently in another, you would have to pay the road tax again. The same rules apply if the vehicle gets sold in a different state. The new owner is liable for the road tax again, according to the applicable state rules.
Calculation of Road Tax
In India, the following elements are taken into account while determining a vehicle's road tax:
Type of vehicle: Road tax charges vary depending on the kind of vehicle, including automobiles, SUVs, two-wheelers, and commercial vehicles.
Engine capacity: The engine capacity of the car is another key factor for determining the road tax. Generally speaking, higher tax rates apply to vehicles with heavier engines.
Usage purpose: In many states, the amount of road tax depends on the vehicle's use, such as whether it is for personal or business purposes. Tax rates for commercial automobiles are typically higher.
Vehicle age: The age of the car influences the amount of road tax payable in some locations. Lower tax rates could apply to older vehicles.
As an alternative, you can utilize the Ministry of Road Transport and Highways' online road tax calculator.
Road Tax Rules in India
India has extremely conventional road tax policies that are rational despite their seeming complexity. The amount you pay relies on the engine capacity (CC), fuel type, registration state, and ex-showroom costs. Some governments, such as Maharashtra and Karnataka, levy an additional fee on diesel vehicles, while others, like Delhi, exempt EVs. For example, a petrol car under Rs. 10 lakh, may get a levy of 10% road tax in one state and 15% in another.
Additionally, the rules regulating private and commercial automobiles differ. Road taxes for private car owners are paid once and are valid for fifteen years. However, depending on their use and the state's transportation laws, commercial vehicles may have to pay quarterly or yearly taxes. There are minor variations in how each RTO implements the regulation, such as the mandatory smart card fees or the different tax rates depending on the vehicle age during re-registration. Additionally, there are several exclusions for:
Electric cars (EVs) in several states
Members of the armed forces
Automobiles for people with disabilities
Gaining knowledge of these road tax regulations ensures compliance and helps you avoid trouble, particularly when buying a second-hand automobile or transferring to other states.
Road Tax Rules for Used Cars
Whether you are buying a used car from another state or plan to move with your vehicle to another state, road tax requirements still apply. If you alter your car's registration status for more than a year, you must re-register it with the local RTO. Depending on the new state's rates, this entails paying road tax and obtaining a No Objection Certificate (NOC) from the former RTO.
If the road taxes in your new state are higher, you will be liable for the difference. Though the process varies from state to state and typically involves paperwork and waiting, you might be eligible for a refund if the tax was higher in your home state. Do not forget that if you do not update your road tax and re-register in a new state, you may face fines and legal issues when examined.
Steps to Pay Road Tax in India
In India, there are two methods to pay road tax: online and offline. Car owners should be aware that they cannot pay road taxes unless they can show proof of an active auto insurance policy. It is the procedure for submitting road taxes online.
Step 1: Visit the Ministry of Road Transport and Highways' Parivahan website.
Step 2: Select Vehicle Related Services under Online Services.
Step 3: Choose the state where your car is registered. You will have access to a new webpage customized to your state.
Step 4: Log in to your account by selecting your Regional Transport Office from the drop-down box.
Step 5: Enter all pertinent information, including the registration number of your car.
Step 6: Pay the vehicle tax online after double-checking the information you submitted.
Alternatively, you can pay the road tax offline at the Regional Transport Office where your car is registered if you feel uncomfortable doing it online. All you have to do is complete the Parivahan tax form, pay at the cash register, and get your road tax payment receipt.
Documents Required for Road Tax Payment in India
You might be required to present a few documents at the Regional Transport Office while paying your road tax offline, including:
Your car's registration certificate
Insurance policy for your vehicle
Purchase invoice for your vehicle
A copy of your proof of identification
Proof of address
A copy of the No-Objection Certificate (NOC) issued by the former state's RTO in the event of an interstate transfer.
How to Get a Refund for Road Tax in India
You must revoke the registration of any car you are discarding that isn't older than fifteen years. The RTO where the vehicle was registered is the place to accomplish it. However, the automobile needs to be returned to the RTO of its original registration if it has traveled between states. Together with the required paperwork, submit an imprint of the engine number or chassis. You will need:
A letter claiming a road tax refund.
Proof of auto insurance.
Certificate of pollution.
Imprint of the engine or chassis number.
The prior RTO's No Objection Certificate.
Original and brand-new registration documents for cars.
Road tax receipt from the prior state.
Migration is evidence of relocating to a different state.
Knowing the documents you need and having them on hand is essential, as several states require additional documents beyond the ones listed above.
Road Tax in Various Indian States
The table below highlights the road tax values implemented across various states in India:
State | Car Price less than Rs. 10L | Car Price more than Rs. 10L | Electric Vehicle (EV) | Fuel Type Surcharge |
Maharashtra | 11% | 13% | Exempted | +2% on diesel |
Karnataka | 13% | 18% | 0% (Exempted) | +2% on diesel |
Tamil Nadu | 10% | 15% | ~1% or Exempted | No major surcharge |
Delhi | 10% | 12.5% | Fully Exempted | Diesel cars discouraged |
Uttar Pradesh | 8% | 10% | 1% or lower | +2% diesel, -1% CNG |
Gujarat | 6% | 12% | Exempted (till 2026) | Mild diesel surcharge |
West Bengal | 10% | 13% | 1%-2% | +2.5% for diesel |
Rajasthan | 10% | 12% | 0%-1% | +1% on diesel |
Conclusion
To make sure you have complied with compliance requirements, you need to be aware of the state-specific car tax system. Since every state has different road tax laws, if you move, be sure to familiarize yourself with the laws of the new state and pay the amount at the local RTO right away. Notably, tax exemptions for EV owners are available in many states, which further increases the appeal of eco-friendly options. Visit the Parivahan Sewa website to learn more about the rules and regulations, car tax rates, and other relevant details.
FAQs
1. Why should I pay road tax? Road fees are essential for vehicles traveling on state, federal, and other highways. Roads are maintained, repaired, and expanded by the government using the funds collected from road fees.
2. How much road tax should I pay?
Road taxes are a state-level matter in India. It is determined by the vehicle's weight, age, engine capacity, and seating capacity.
3. What is the difference between toll tax and road tax?
As required by the state government, road tax gets assessed at the time of a vehicle's registration in that state. When you drive on interstate roads and expressways with specified toll charges, the National Highway Authority of India imposes a toll tax.
4. Who should pay road tax?
Road tax is essential for all recently purchased cars at the time of registration. Additionally, when owners move to a different state and register their vehicle with the new RTO, they have to pay the fee.
5. Which state in India has the lowest and highest RTO tax?
The northeast region has the lowest road tax. Himachal Pradesh has one of the lowest road tax rates in India. Karnataka has the highest tax rate in India, at 14.43%.
6. What if you don’t pay the car road tax in India?
During the grace period granted by the state, you typically have 15 days to pay the vehicle road tax. If you miss the deadline, the tax office assesses a penalty on top of the arrears. However, the combined sum cannot exceed the annual tax due on that particular vehicle.
7. Can a road tax refund be claimed online?
Currently, it is not possible to submit an online claim for an automobile road tax refund. Only by going to the local RTO and presenting the required paperwork can it be completed. Furthermore, you are not eligible to receive a road tax refund for a car that you purchased from someone else. The refund claim becomes invalid if the owner's name changes when the car relocates from one state to another.
8. What is the method for calculating the car road tax refund?
The amount of the return depends on the length of time the owner has paid the road tax, or the number of years from the vehicle's first state registration until the refund request occurred. For instance, the owner will be entitled to about 66% of the total amount paid in taxes if they have paid the road tax for five years.
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