Maharashtra hikes one-time registration tax on vehicles

The local government wants to make up for the loss of octroi and LBT.

Looks like people in Maharashtra won’t have much of a reason to rejoice over the recent GST price benefits. The state government has announced a 2 per cent increase in the one-time registration tax which is levied on both two-wheelers as well as four-wheelers.

The present tax rates in Maharashtra are 9 per cent and 11 per cent for petrol and diesel cars respectively – for cars up to 10 lakh rupees. On the other hand, it’s 10 per cent and 12 per cent, in the same order, for those costing between 10 lakh and 20 lakh. Now an additional 2 per cent will be levied across the whole aforementioned range. Similarly, motorcycles will be taxed anywhere between 10 – 12 per cent, up from previous 8 – 10 per cent.

On the brighter side, the tax increase is capped at Rs. 20 lakh, keeping all the premium vehicles safe. The reason this step has been taken is so that the tax revenue from premium vehicles does not go to some other state. The Transport Secretary claims that as high-end vehicles are already slapped with a 20 per cent tax, so to increase it further was not proposed.

The motivation behind the abrupt tax increase is to make up for the Rs. 700 crore annual revenue loss that the Maharashtra government was projected to face post-GST – as octroi and local body tax in the state were scrapped.

As a result, all those who were planning to buy a sub 20-lakh rupee vehicle (undoubtedly, a majority of vehicle buying population) in Maharashtra, have their GST savings dreams fiddled with - courtesy local government.