Vehicle registration charges, a large component of which is road tax, are nominal in Pondicherry compared to the state and virtually every luxury vehicle which rolls out of a Jaguar, Range Rover, BMW, Bentley, Mercedes or Audi showroom, bears a PY registration. On a monthly average, Bangalore market alone devours as many as 80 high-end cars, each of which cost anywhere between Rs 36 lakh and Rs 2 crore, but these cars are registered in Pondicherry.
It is illegal to use a vehicle registered in another state for more than 30 days on city roads, but the owners of these vehicles have nothing to fear as the traffic police rarely flag them down to check documents, unlike a small or mid-segment car with a non-Karnataka registration.
It’s a win-win situation for these moneybags as they end up saving anywhere from Rs 6 lakh to Rs 36 lakh on a new vehicle. For instance, a person buying a BMW X6 (50i) SUV, which costs about Rs 1 crore, needs to pay a vehicle registration tax of only Rs 75,000 in Pondicherry. If the same vehicle were to be registered in any RTO in Karnataka, the owner would have to shell out 18 per cent in tax, plus a cess of 11.5 per cent on the tax. This would work out to more than Rs 19 lakh.
What’s more, Pondicherry offers other ‘bargains’ too. If one wants a fancy number in Karnataka, RTOs charge a fee ranging from Rs 25,000 to Rs 75,000. But in Pondicherry, the fee amounts to no more than Rs 2,500.
While Karnataka levies the highest registration tax among states in the country, Pondicherry’s tax structure is the lowest.
The Union Territory follows a slab structure: Rs 40,000 for a vehicle which costs up to Rs 10 lakh; Rs 50,000 for vehicles priced between Rs 10 lakh and 50 lakh; and Rs 75,000 for any vehicle which costs more than Rs 50 lakh.
In Karnataka, taxes are charged as a percentage of the unit cost. For a vehicle costing up to Rs 5 lakh, the tax is 13 per cent; 14 per cent for a vehicle costing up to Rs 10 lakh; 17 per cent for vehicles costing between Rs 11 and 20 lakh; and 18 per cent on vehicles which cost more than Rs 20 lakh. This is apart from the cess of 11.5 per cent.
In other states, registration charges are between 10 per cent and 14 per cent. Dealers admit the high tax structure in the state is literally driving owners to Pondicherry. A person buying a lower-end Mercedes ends up paying Rs 6.5 lakh in tax in Karnataka. The same vehicle can be registered at a throwaway Rs 50,000 in Pondicherry - with a fancy number thrown in.
“There are some people, especially corporates, who are conscious of the law and prefer to register their cars in Karnataka to avoid harassment at the hands of RTO authorities and traffic police,” a dealer said. “But most prefer to have their vehicle registered in Pondicherry.”
Syed Shafi Ahmed, an RTO, clarified: “As per the Motor Vehicles Act and Karnataka Taxation acts, it is illegal. According to rules, non-transport vehicles from other states can ply on roads in the state for a period of one month. If the vehicle is in the state for a longer time than that, the owner has to get it registered here. The onus is on the owner to prove that the vehicle is in the state for not more than 30 days. They can do this by showing a fuel bill issued in another state indicating the date.
“If the date is within 30 days, they will not be asked further questions. If RTO authorities find a vehicle which is here for months, it will be seized and given to the owner only after he or she pays road tax here.” Ahmed said that the rule is being uniformly applied, regardless of the cost of the vehicle, but those in the know claim otherwise.
“In spite of the application of the law, luxury vehicles with Pondicherry registration numbers are flourishing in Bangalore,” a source said. “Let the authorities go to high-end car dealers and examine the records. It will clearly indicate that buyers, who are income tax assessees in Bangalore, are registering their vehicles in Pondicherry.”