Hike in life tax on vehicles soon

HYDERABAD: Planning to buy a new vehicle? You better rush. The state government is planning to increase the lifetime tax on new vehicles by 2-5 percentage points due to which consumers may have to shell out an additional Rs 2,000-5,000 per lakh.The proposal has been pending with the government because of the forthcoming byelections in the state. The orders may be issued after the June 12 byelections.The Regional Transport Authority (RTA) proposed the hike in lifetime tax on luxury cars, motorcycles, non-transport vehicles, tractors and autorickshaws back in November 2011. While the file moved back and forth within the bureaucracy, the poll notification was issued and code of conduct kicked in. With the government barred from taking policy decision during the poll campaign, the proposal was kept idling.Transport officials estimated that the tax increase would augment the government’s revenues by Rs 150-200 crore per year given that over 10 lakh vehicles are bought every year in the state. The last time the lifetime tax on vehicles was raised was when K Rosaiah was chief minister when it was increased from 9 per cent to 12 percent on four-wheelers.At present lifetime tax on new vehicles is 9 per cent of the cost for two-wheelers, 12 per cent for four-wheelers, and 14 percent if it is the buyers’ second vehicle.RTA officials have proposed introduction of life tax on tractors and autorickshaws. At present, the tax on these two categories of vehicles is collected once in three months.As per the RTA’s proposals, lifetime tax will be raised to 16 per cent on motorcycles costing more than Rs 1 lakh; 14 per cent for four-wheelers costing less than Rs 20 lakh; and 18 per cent on vehicles costing more than Rs 20 lakh. A tax of 18 per cent is proposed on non-transportation vehicles of companies and industries. For the first time, a 3 per cent tax has been proposed on tractors, trailers and autorickshaws.The new life tax and VAT together will raise the cost of a four-wheeler by 21 per cent over the ex-showroom price.