The Maharashtra government on Monday increased the Motor Vehicle Tax by two percentage points to make up for the revenue losses resulting from the cancellation of octroi and local body tax (LBT). The two taxes were discontinued following the roll out of the Goods and Services Tax (GST) regime across the State from July 1. Officials said this may not result in an immediate increase in cost of vehicles but may be factored in at a later stage.
The State officials did not clarify how much revenue is likely to be accumulated as a result of the increase, but said the hike could be in the range of 2% to 4% depending on engine capacity. The new State government-approved hike also fixes the maximum tax cap at up to ₹20,00,000 on high-end and imported vehicles, most of which are being registered outside the State to save registration fee.
This, officials hope, will give an incentive to owners of imported vehicles to register their vehicles in Maharashtra.
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“This is like a double bonanza for the owners of imported cars and vehicles, who were already benefiting from a cost cut following the roll out of the GST regime. Now with a tax cap in place, they will be able to save a lot and encouraged to register their vehicles in Maharashtra,” said an official.
The Cabinet approved amendments to the State Motor Vehicle Act, 1958, under which 8% to 10% tax is being charged on two- and three- wheelers. This will now go up to 10% to 12%, officials said. Motor vehicles that run on petrol are being charged 9% to 11%. This will now increase to 11% to 13%, while tax on diesel vehicles will increase to 13% to 15% from 11% to 13%. “The CNG/LPG rates will increase from 7% to 9% from 5% to 7%.”
“Most imported high-end vehicles are registered outside the State and are later used in the State. To remove this anomaly, we have fixed a cap,” said an official.
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