Government guidelines and aspects of road tax in India

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20 Jun 2023

Understanding road tax regulations and payment procedures for vehicles in India: A comprehensive guide..

A person who buys a vehicle is required to pay the mandatory road tax. The road tax in India is a state-level tax, meaning each state's government imposes it separately. The procedures and regulations for collecting the road tax vary by state and type of vehicle. The Central Motor Vehicles Act mandates that the entire car tax in India be paid upfront if a car is used for longer than a year.

Who imposes road tax in India?

All two-wheelers, four-wheelers, and other vehicles used for personal and professional reasons are subject to road tax.

  • The state government collects tolls, state vat, and the annual or lifetime motor vehicle tax.

  • Based on the model and kind of vehicle, the state government imposes customs duty, central excise, central sales tax, GST, and various supplementary.

Apart from national highways created and maintained by the central government, nearly 80% of the roads in all the states of India are constructed by the respective state government. Since each state pays for its share of the expense of building these highways, each state imposes its road fee.

Who needs to pay road taxes, and how are they determined?

Road taxes are paid by vehicle owners and are calculated based on the vehicle's ex-showroom price. The following factors determine how much will be the road tax in India:

  • Number of seats in the car

  • The vehicle's engine capacity

  • The vehicle's age

  • The vehicle's weight

A person is needed to pay the road tax in India while registering a vehicle. Depending on the varied standards used by various state governments, the respective RTO typically asks for the car tax in India when registering a car (Regional Transport Office). The car registration certificate, vehicle insurance papers, ID evidence, residence proof, and vehicle purchase invoice are needed to pay the road tax.

How to get a road tax refund?

If you are migrating from one state to another, you need to get a refund by visiting the current RTO. You require the following documents while filing a refund for road tax in India -

  • Request letter for refund

  • Insurance documents

  • Chassis imprint

  • Pollution document

  • Original or notarized copy of a smart card

  • Migration proof

  • CRTI information

  • RTO form 16 and DT

  • NOC from the current RTO

India is a big country with an extensive network of highways connecting different cities within a state and separate states. Vehicles are subject to a road tax in India that must be paid at the time of purchase to fund these roads' building and upkeep.

It is a state-level tax that must be paid by a vehicle owner in India. Because each state has its rules and regulations governing road taxes, road taxes vary from state to state.

Know about Income Tax Act under Section 80CCD

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Team Kotak GIC

The content of this blog has been created and carefully reviewed by the esteemed team at Kotak General Insurance, with the sole purpose of providing valuable guidance and sharing insights on the importance of general insurance. Our objective is to assist users in making informed decisions when purchasing or renewing insurance policies for their cars, bikes, and health. Our expertly curated information aims to empower our readers with the knowledge they need to protect their valuable assets and financial interests.