Cars and two-wheelers are all set to become more expensive in the Capital with the Delhi Cabinet approving a proposal on Monday to increase road tax on them. The new rates would come into force on issuance of a notification.

Informing the media about the decision, Chief Minister Sheila Dikshit said rationalisation of road tax rates had become necessary because the old rates had been in force for several decades. The new rates, she said, have been decided after considering the prevalent rates in the neighbouring States.

As per the proposal, while the registration fee on two-wheelers costing up to Rs. 25,000 would remain unchanged at 2 per cent, the rates have been increased for all other private two-wheelers and four wheelers.

For two-wheelers costing between Rs.25,000 and Rs.40,000, the new rate would be 4 per cent, while people buying two-wheelers worth more than Rs.40,000 would have to pay road tax of 6 per cent.

Those intending to purchase cars would also have to dig deeper into their pockets. While cars costing up to Rs.6 lakh will now be charged at 4 per cent, those costing between Rs.6 lakh and Rs.10 lakh would entail a tax of 7 per cent. Luxury car buyers would now have to shell out 10 per cent of the cost of the vehicle as road tax.

The Delhi Government is of the considered view that “this will go a long way in restricting purchase of luxury cars and also discourage use of private vehicles”.

The Government has also justified the hike in road tax by stating that the Capital city has no scope for expansion and with registration of around 1,000 new vehicles daily, the traffic problem is only compounding.

With there being 6 million vehicles registered in Delhi, Ms. Dikshit said the rates have not only been rationalised just to enhance revenue generation but there are other justified reasons which were known to one and all.

The Cabinet has on the other hand decided to continue with the prevalent rates of road tax for public utility vehicles like public goods carriers so that the transportation costs of commodities do not go up further.

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