The Hindu : New Delhi News : L-G clears new tax, car prices to hit a new high

Online edition of India's National Newspaper
Monday, Jan 31, 2005

New Delhi

New Delhi

L-G clears new tax, car prices to hit a new high

By Our Staff Reporter

NEW DELHI, JAN. 30. Delhiites will soon have to shell out more tax while purchasing a new car. This follows the clearance by the Lieutenant-Governor of Delhi, B L Joshi, to the new ad valorem road tax regime. With the Delhi Assembly having already approved this, the new tax will be implemented after final clearance from the Centre, which is expected within a fortnight. According to the Delhi Finance Minister, A.K. Walia, soon after getting necessary clearance from Mr. Joshi last week, the proposal was forwarded to the Central Government. As the proposal has already been cleared by the Union Law Department, it might take a maximum 15 days to get Presidential assent for its implementation.

Once this formality is completed, the new tax regime would be notified immediately and imposed. Since this tax is applicable at the time of registration of new vehicles the Government need not inform the car companies about it, Mr. Walia said. Interestingly, the State Government had planned to impose the new tax from January 1, but for want of clearance from the Lieutenant-Governor, the proposal got delayed.

Once the tax is implemented, those buying luxurious vehicles will be affected more compared with those buying vehicles at the entry level. So while the new tax regime will further increase the burden on those buying vehicles especially in the luxury vehicles category, the State Government is expected to take in substantial revenue gains from the next financial year onwards.

According to the new system, vehicles costing up to Rs. 4 lakhs will have to pay 2 per cent road tax on the total cost and those beyond the Rs. 4 lakh-mark will have to pay 4 per cent road tax. This is likely to fetch the Delhi Government additional revenue of around Rs.60 crores in a financial year. At present, the collection from this head is between Rs.150 crores and Rs.160 crores.

For instance, at present a Maruti 800 attracts a road tax of around Rs. 3,800. But under the new regime it will have to pay around Rs. 4,000. Similarly, for Maruti Alto around Rs.3,800 has to be paid as road tax and that will go up to Rs.5,700. And for Wagon R standard road tax will go up to Rs.6,500 from the present Rs.3,815. As for the luxury category and multi-utility vehicles including sedans like Mercedes, Honda Accord, Mitsubishi Pajero, Tata Safari, Maruti Grand Vitara, Honda CDR and Honda CRV, the road tax is around Rs.7,000 at present. This will go up substantially with a 4 per cent road tax on their total value. For instance, a Grand Vitara costing Rs. 16.16 lakhs will attract a road tax of around Rs. 64,000, while a Mitsubishi Pajero costing Rs. 18.69 lakhs will attract a road tax of around Rs.74,000.

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