Road tax on discounted vehicles to decrease, thanks to High Court

The Indian road tax structure is quite confusing and each state has different rules and tax percentages. In a new case, a judgment has been passed that will allow consumers to save more money while registering new, discounted vehicles. Here’s how.

The court has said that the lifetime tax should be levied on the invoice price, rather than the ex-showroom price of the vehicle. Which means, the Road Transport Authority (RTA) will now consider the price printed on the invoice, rather than the ex-showroom price, while calculating the lifetime tax of the vehicle. It means that the vehicles that are on discount will only have to pay lower tax from now.

This particular case is from Telangana, where the RTAs were calculating and collecting tax on the ex-showroom price of the vehicle announced by manufacturers. Advocate Kishore Rai, who bought a Volvo XC60 SUV at a discount of Rs. 3 lakh on the ex-showroom price, had to pay tax on the ex-showroom price set by the manufacturer. While the ex-showroom price of the XC60 is Rs. 55,90,000, the cost on the invoice was Rs. 52,90,000. The petitioner claimed that he had to pay an excess of Rs. 51,000 towards the lifetime tax of the vehicle.

Passing the judgement, the court said,

“..petitioner is entitled to refund the said amount thus illegally collected from him. The state cannot be allowed to levy life tax on the ex-showroom price shown in the price list, which is not, in fact, the actual “cost of the vehicle”.

According to the AP Motor Vehicles Taxation Act, the life tax is to be levied on the ‘cost of the vehicle’ and not on the ‘ex-showroom price of the vehicle’. However, the Telangana RTA has been charging the customers based on the ex-showroom value of the vehicle. The dealers now feel that many car buyers will seek a refund after the judgement.

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