TN govt hikes road tax; cost of cars, bikes to rise

On October 11th, Tamil Nadu Assembly passed a bill amending the TN Motor Vehicles Taxation Act, 1974. The price of old and new vehicles, including two-wheelers, four-wheelers and other vehicles, will increase as the government has decided to raise the life tax of all vehicles. The tax rates for private buses and regular auto rickshaws have not been revised. Transport minister Sivasankar said that this has been done in order to augment the state’s revenue.

As per the new legislation, a new two-wheeler that costs more than Rs 1 lakh will incur a life tax of 12% and if it costs less than Rs 1 lakh then 10% tax will be levied. In the case of cars, if a new car costs more than Rs 20 lakh, its life tax would be 20%; and if the vehicle cost is between Rs 10 and Rs 20 lakh then its life tax would be 18%. And, if the vehicle cost is between Rs 5 and Rs 10 lakh, the life tax will be 13%; and all vehicles costing Rs 5 lakh and below would incur a life tax of 12%. Used vehicles will also need to pay a revised life tax depending on how old they were and their price.

Green tax and vehicle safety tax have also been increased under the new legislation. A green tax of Rs 1,500 for five years would be imposed on motor vehicles (other than transport vehicles) that have completed 15 years from the date of their registration. For motorcycles that are 15 years old, the green tax would be Rs 750 for five years. Transport vehicles that are seven years old would need to pay a green tax of Rs 750 per year whereas autos needed to pay Rs 250 per year.

The legislation stated, “The receipts from the taxes on vehicles are low resulting in less revenue to the government and in order to augment the financial resources of the State exchequer, the government has decided to amend the Act suitably”.
Not all of DMK’s allies were in consensus with the Bill. Congress opposed the Bill while legislator T. Velmurugan CPI(M) and VCK questioned aspects about the Bill. Now, the Bill has to passed by the Governor only then it can come into effect.