GST Impact: Road Tax Increased In Maharashtra


Maharashtra has increased the road tax on new cars by 2 percent. That said, maximum road tax has now been capped to Rs 20 lakh.

The Maharashtra government has increased road tax in the state by 2%. Road tax is a one time payment that is mandatory when buying a brand new car and has gone up for both petrol and diesel vehicles. For petrol vehicles, the tax which was originally 9-11 percent of car value has now been increased from 11-13 per cent depending on the size of the car. The road tax on diesel, which was originally levied at between 11-13 per cent is now up to 13-15 per cent instead similarly depending on the size of the car. The road tax hike is due to the recent GST implementation where the state of Maharashtra is expected to incur considerable losses amounting over Rs 700 crore due to the scrapping of the Excise taxes.

Smaller cars under the 4-meter range with petrol engines under 1.2-litres, diesel engines under 1.5-litres and larger engines too, which recently got tax cuts of 2.5, 2.23 and 1.7 per cent respectively will now also have to pay 2 percent more in road tax which makes the price cut with the new GST structure nearly redundant. Road tax was originally supposed to be a part of GST but after protests from various state governments, it was left out with the likes of petroleum products and alcohol.

On the positive side, the state of Maharashtra has also capped the highest road tax payable to Rs 20 lakh. This comes as good news to a lot of future supercar and luxury car or SUV owners who in Mumbai would pay huge amounts of road tax to get their cars registered inside state limits. This also means that supercars will become even cheaper with the new GST and updated road tax structure and the problem of out-of-state registered sportscars and luxury cars will cease to exist.

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