Buying small cars like Maruti-Alto or Tata Nano will cost more in Punjab following the state government's decision to levy motor vehicle tax (MVT) at a uniform rate of at 6 per cent instead of slab system.
"Those who buy two-wheelers and small cars will now have to pay more tax on buying a vehicle," a senior official in Punjab Transport Department told PTI here today.
Punjab cabinet has done away with the slab system of imposing MVT by introducing uniform rate of tax at 6 per cent on all types of passenger vehicles including two wheelers, he added.
This move is likely to pinch two wheeler and small car buyers the most as they have to cough up more on buying their means of transportation.
The tax implication will be harsher for those who buy cars valuing less than Rs 5 lakh as their tax rate will go up threefold from 2 per cent to 6 per cent. Two per cent additional tax will be paid by two-wheelers buyers as they will pay now 6 per cent instead of 4 per cent.
The maximum volume of vehicles registration takes place in 2 and 4 per cent slab in which small and mid-sized cars and two wheelers fall and it will generate more revenue to the state, official said.
With the implementation of uniform rate of MVT, ultra-rich and rich people will escape with paying less tax on buying luxury, high-end and premium cars as their tax incidence will come down by 2 per cent to 6 per cent.
Under different tax slab system for MVT, the Punjab government levies 2 per cent MVT on cars having value less the Rs 5 lakh, 4 per cent on cars with value between Rs 5 and 10 lakh, 6 per cent on vehicles with value between Rs 10 and Rs 20 lakh and 8 per cent on vehicles with value of more than Rs 20 lakh.
However, 4 per cent MVT is levied on two-wheelers. Punjab is considered to be the high potential market for automobile and two-wheelers industry because of rising standard of living and increasing purchasing income because of skyrocketing land prices. A total of 45,000-50,000 vehicles are registered per month in Punjab and a sum of Rs 170 crore is collected annually as MVT, an official said here.
Besides introducing uniform rate of tax, the lump sum motor vehicle tax has also been hiked from Rs 250 to Rs 7,500 depending upon the vehicles by the Punjab cabinet on August 28. These steps are likely to garner additional revenue of Rs 108 crore per annum to the debt-ridden state.
The SAD-BJP led Punjab government is already facing wrath from several quarters for burdening the public with a host of levies like property tax, increase in VAT rate, luxury tax among other decisions which according to officials will yield additional revenue of Rs 900 crore to the state exchequer per year. Buying small cars like Alto, Nano and two-wheelers to cost more in Punjab - The Economic Times