All You Need to Know About Road Tax in India

When you purchase a new vehicle from a showroom, you will notice that the ex-showroom price mentioned on the brochure or company website is lower by around Rs. 15000 or approx. 10% depending on the state in which you are residing.

The on-road price of a bike or four-wheeler is base manufacturing price plus registration charges, road tax and insurance, thus increasing the total price by approximately 10% of the vehicle charge.

While registration and insurance are self-explanatory, vehicle owners will need to pay a road tax to the government to drive the vehicle in the said state.

Let’s answer all questions you might have about this tax levied by the Government of India in order to ply your vehicle on the Indian roads.

The Central and State government charges a tax on the purchase of a new vehicle mainly to maintain the infrastructure of Indian roadways.

Vahan tax is basically authorities recovering funds spent on various activities like deploying safety and recovery services on India’s streets.  As per the Central Motor Vehicles Act, the government mandates to pay the road tax as an one-time payment if an individual uses his/her vehicle for more than a year.

Why is Road Tax levied on buyers?

Indian roadways network is one of the largest globally, with a total length stretching over 58.98 lakhs kilometres that runs across the country.

To maintain the infrastructure of such a vast network of roads and provide basic amenities like street lights and road signs, the Indian government recovers expenditure in the form of a tax from vehicle owners in the country.

Funds collected are also spent on providing safety measures and emergency first aid in case a driver cannot evade on-road mishaps.

Further, this money is also used to expand the roadways network and upgrade highways and expressways as time goes by and more vehicles ply on the roads.

Therefore, while buying a new vehicle, buyers will have to pay a specific amount as road tax in compliance with Section 39 of the Motor Vehicle Taxation Act 1988.

Who levies Road Tax and why is it State Level?

In India, new-vehicle buyers will have to pay a road tax to the State government and the Central Government to maintain the country’s road networks.

However, as a prospective buyer, you will be paying road tax to the state in which you buy your vehicle and plan to drive as well.

What this essentially means is that you will be paying a road tax to the Delhi government when you buy a bike or car in the state.

Further, if you move from Delhi to Maharashtra, you will need to pay the Maharashtra state government a state road tax within a month of moving.

The primary reason for the state government’s involvement in collecting road taxes is that the State Municipal Corporation is in charge of developing and maintaining the road network within a state.

Only national highways (NH) are built and maintained by the Central Government.

Road tax in India is charged equally both on private and commercial vehicles irrespective of its size. Thus, every individual who purchases a motorised vehicle like bikes, auto-rickshaws, cars, SUVs, CUV, and even buses and trucks will need to pay a road tax to ply the vehicle. 

When and Where to Pay Parivahan RTO Tax?

As stated earlier, the respective road taxes are paid during the time of registering the vehicle with the respective state RTO (Regional Transport Office). Usually, the dealer or showroom collects the tax on their behalf, and buyers will be handed the receipt once the payment is complete.

How Can You Pay Road Taxes in India?

Earlier, vehicle owners had to physically visit the state’s RTO and fill out a Road tax form with the said amount  and required documents..

While RTO’s still collect road taxes, you can also quickly pay the amount digitally from the comfort of your home by logging into the official online portal.

• Step 1: Visit the Parivahan website maintained by the Ministry of Road Transport and Highways.
• Step 2: Under Online Services, click on Vehicle Related Services.
• Step 3: Select your state after which a new page will appear on the screen
• Step 4: Here, select your State and RTO from the drop-down menu and log into your account.
• Step 5:  In the pay tax option, enter your vehicle registration number and fill in other details.
• Step 6: Verify details and pay your road tax.

When you move to a new state, you will need to obtain a NOC from your current RTO, register again with the new state RTO, and pay the road tax again.

However, you can receive a refund from the current RTO when you relocate or discard your vehicle.

When claiming a refund, you will need the following documents:

• Request letter for refund
• A smart card (original or notarized copy)
• Chassis imprint
• Pollution and insurance documents
• NOC from current RTO
• Receipt of original road tax
• Proof of migration
• RTO Form 16 and DT
• CRTI Intimation (only applicable in Karnataka)

Car owners will need to visit the current RTO in person with the relevant documents in order to claim a road tax refund.

Is there a Penalty for Not Paying Road Taxes in India?

Yes.

Defaulters will be charged a fine in case they do not pay road taxes within the stipulated time. Charges for the same are calculated as:

• Tax amount payable for the vehicle for two quarters for first offenders.
• In the case of serial offenders, fine shall not be less than equal to a vehicle’s annual tax, which may be extended to twice the yearly tax amount.
• Fines shall not be less than Rs. 300, which can be extended to the one-time annual tax. This fine cannot be less than Rs. 500 and can be extended to twice the yearly tax amount for serial offenders. 

Road tax for a vehicle is calculated based on various factors, including the following:

• State where the vehicle is registered
• Vehicle engine capacity (CC)
• Seating capacity (bike, car, omnibus, truck)
• Vehicle’s age
• Weight
• Fuel type (petrol vs diesel)
• Usage and vehicle class (personal vs commercial use)
• Date of purchase and registration

Is There Any Road Tax for Other State Vehicles?

No, there is no road tax if you are only visiting a state. Only new vehicle buyers are supposed to pay road tax to the respective state government.

However, if you are relocating, you will need to visit the current RTO and obtain a NOC.