Analysis of Existing Tax Structure

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3. Analysis of Existing Tax Structure

The chapter mainly highlights various transport related taxes levied by both central and state government. All the taxes are analysed on the basis of their purpose, tax rates, vehicle type and basis of levying tax. In the first part, the taxes levied by central government are discussed followed by those levied by state government.

  1. Central government taxes on transport vehicles

The taxes levied and administered by the central government on transport vehicles are

  • Central Excise Duty on motor vehicles and fuel
  • Central Sales Tax
  • Customs duty on motor vehicles and fuel

Each of these taxes are further studied in terms of its rates and basis of levy.

2.1.1 Central Excise Duty on motor vehicles and fuel

It is levied and administered by the central government on all the goods manufactured in India. Since it is an indirect tax, it is mostly transferred to the consumer of the product. Thus it falls in the category of user charges being paid for the utility of the product. In case of central excise duty on a motor vehicle, it is initially paid by the manufacturer of the motor vehicle, but is later transferred to the consumer by adding it to the net vehicle cost. Table…….shows the rates of central excise duty levied on various vehicles.

Table … Central excise duty rates of various vehicles.

Type of Vehicle

Rate of Duty

For transport of not more than 13 persons

24%

for transport of more than 13 persons

15%

for 3 wheeled motor vehicles (auto rickshaws)

12%

for motor cars

-upto 1500 cc

24%

- exceeding 1500 cc

30%

-electrically operated

15%

for 3 wheeled transport of goods

12%

for transport of goods vehicles other than petrol driven

15%

dumpers, lorries and trucks

25%

motor vehicles spare parts and accessories

12%

for 2 wheeled motor cycles and moped

12%

Source: Central Board of Excise and Customs, Government of India, 2013-14

Table … Central Excise Duty rates of Fuel

Fuel

Basic Rate of duty

Motor Spirit

14% + Rs. 15/litre

High Speed Diesel

14% + Rs. 5/litre

Compressed natural gas

14%

Key Observations

  • No Distinguished differentiation in tax rates of passenger vehicles in terms of public or private use was observed. These vehicles are differentiated only in two categories of seating capacity.
  • In case of three wheelers, rates levied are same (12%) for both transport of goods as well as transport of passengers.
  • Tax rates for 2 wheelers are uniform irrespective of engine capacity, weight and cost.
  1. Central Sales Tax

The central sales tax is levied at the rate of 2% on inter-state transaction and shipment of vehicles. Its main objective is collection of tax revenues on sales of goods in the course of inter-state trade or commerce.

  1. Customs Duty on motor vehicles and fuel

It is a one-time tax paid during the purchase of vehicle at 10 percent. Custom duty on fuel is also levied at 10%. Following tables show the rates at which various types of vehicles, fuel and spare parts of motor vehicle are taxed.

Table….: Custom duty on vehicles and fuel

Custom Duty on vehicles

Rates

For transport of not more than 13 persons

10%

for transport of more than 13 persons

10%

for 3 wheeled motor vehicles (auto rickshaws)

10%

Chassis fitted with engines for motor vehicles

10%

-upto 1500 cc

10%

-exceeding 1500 cc

10%

-electrically operated

10%

for 3 wheeled transport of goods

10%

for transport of goods vehicles other than petrol driven

10%

dumpers, lorries and trucks

10%

motor vehicles spare parts and accessories

10%

for 2 wheeled motor cycles and moped

10%

Custom Duty on Fuel

Motor Spirit

10%

High Speed Diesel

10%

Compressed natural gas

10%

Source: Central Board of Excise and Customs, Government of India, 2013-14

Observations

  • The table … clearly shows that the duty on fuel is uniform for all the three types of fuels irrespective of different emission levels of using any particular type.
  • Unlike central excise duty, custom duty are not variable on different types of vehicle and fuel.
  1. State Government Taxes on Motor vehicles and Fuel

Since the revenue from these taxes is directly proportional to the number of vehicles sold, the rates are compared for the following states with high, medium and low number of vehicles registered. Maharashtra and Gujarat are the states identified with the highest number of vehicles followed by Karnataka and Rajasthan, whereas Bihar and Haryana being the states with less number of vehicles registered.

  1. Sales Tax/Vat on vehicles, spare parts and fuel

For the transportation sector sales tax/Vat is applicable for the sale of vehicles, spare parts and accessories and fuel. The rates of state-VAT on motor vehicles vary from State to State but in general are taxed at the rate of 12.5%. Following table shows the sales tax/Vat rates for various transport related commodities.

Table … Sales Tax/Vat rates for motor vehicles, spare parts and fuel in different states

Sales tax/Vat

States

Vehicle

HSD

Petrol

Spare parts

Bihar

12.50%

18.30%

24.50%

12.50%

Haryana

12.50%

8.80%

20%

12.50%

Karnataka

12.50%

25%

12.50%

Rajasthan

12.50%

18%

28%

12.50%

Gujarat

12.50%

24%

23%

12.50%

Maharashtra

12.50%

23%

12.50%

Source: Compiled from commercial tax department of various states

Observations

  • Rates of sales tax for vehicles and spare parts are observed to be same for all the states irrespective of the type and purpose of the vehicle.
  • In case of fuel, it is levied at different rates for both high speed diesel and petrol.

.

  1. Motor Vehicle Tax

Motor vehicle tax forms an important source of revenue for the states. The existing structure of this tax is mainly based on ownership of vehicle and is paid during the purchase of the same. Apart from this it can also be observed to be indirectly related to the use of road transport service, in other words a road tax. Thus it is levied to meet two objectives, first being that of generation of revenue for the states through purchase of vehicles and second to regulate increasing number of vehicles to reduce congestion and pollution. Table … shows the rates of motor vehicle tax across different states and the basis of levying these taxes.

Table … Motor vehicle tax for two wheelers

Vehicle Type

Bihar

Haryana

Karnataka

Rajasthan

Gujarat

Maharashtra

Basis of levy

Upto 90.72 kg

Above 90.72 kg

Upto 0.5 lakh Rs.

Above 0.5 Lakh Rs.

Electric

Upto 125cc

>125cc

2W

6% VC

Rs.150

Upto 0.6 lakh Rs.

2%

10%

12%

4%

4% VC

6% VC

6% VC

7% VC

0.6-4 lakh Rs.

4%

>4 Lakh Rs.

5%

Observations

  • Most states levy tax on two wheelers based on its cost. Rajasthan is the only state to levy tax on the basis of engine capacity.
  • Other than Karnataka, no other state mentions tax on vehicle which are electrically operated.
  • Haryana has the least tax rates followed by Rajasthan,

Table…Motor vehicle tax for four wheelers

Vehicle type

Bihar

Haryana

Karnataka

Rajasthan

Gujarat

Maharashtra

4W

3% VC

Upto 5 lakh Rs.

2%

Upto 5 lakhs

13%

Upto 205 lakhs

2.50%

6% VC

Petrol driven

Diesel Driven

CNG/LPG Driven

5-10 Lakhs

4%

5-10 lakhs

14%

2.5-6 lakhs

5%

Upto 10 lakhs

9%

11%

5%

10-20 lakhs

6%

10-20 lakhs

17%

>6 lakhs

8%

10-20 lakhs

10%

12%

6%

>20 lakhs

8%

>20 lakhs

18%

>20 lakhs

11%

13%

Electric

4%

Observations

  • Levy basis on cost of four wheelers was observed, however the upper limit or range of these vehicle costs was not found to be similar for all states.
  • Maharashtra is the only state to levy tax on four wheelers on the basis of different fuel driven vehicles and cost of the same.

Table…Motor vehicle tax for three wheelers/Auto rickshaws

Vehicle type

Bihar

Haryana

Karnataka

Rajasthan

Gujarat

Maharashtra

3W/Autos

Rs.5000 for 10 years

Passengers

Rs.2500 LTT

Upto 2 pass.

8% VC

Upto 3 passengers

2.5% VC

Goods

Rs.2500 LTT

Upto 3

9% VC

6-Mar

6% VC

Upto 4

10% VC

Goods

10% VC

Observations

  • Taxes are based on seating capacity of three wheelers.
  • Karnataka state has similar tax rates for both three wheeled passenger and goods vehicle.
  • No differentiation based on types of fuel.

Table….Motor vehicle tax for passenger transport vehicles(buses)

Bihar

Haryana

Karnataka

Rajasthan

Gujarat

Maharashtra

Stage carriage

Contract carriage

Seating capacity and vehicle cost

VC

Contract carriage

Stage Carriage

Rs.71 PSPA

13-26

Rs.1583.50(+105.50)

Rs.550 per seat per annum

Rs.600 PQ (seating)

Rs.2500PQ

12-14

6%

<12

Rs.1200PA

+passenger tax of 3.5% in MC

27-32

Rs.3036(+79)

Rs.100 PQ(standing)

15-22

9%

12-20

Rs.3000 PA

+17.5% of fare

>33

Rs.3485(+53)

23-32

12%

>20

Rs.3600PA

Contract carriage

33-42

16%

Sleeper Omni Bus

12-Jun

Rs.1000PSPA

>42

18%

<20

Rs.9000PSPA

24-Dec

Rs.1700PSPA

>20

Rs.12000P

>24

Rs.1900PSPA

Luxury omni bus

Tourist vehicles

Rs.5000-Rs.7000

<20

Rs.4620PSPA

>20

Rs.6000PSPA

Observations

  • Taxes are levied on seating capacity and the purpose of using the vehicle i.e. stage carriage, contract carriage or tourist vehicle.
  • No standard range of seating across different states.
  • The rates of motor vehicle tax shows wide variation for all the states mentioned.
  • Few states collect tax on per annual basis, whereas some collect it on per quarter basis.

Table…Motor Vehicle Tax goods transport vehicles

Bihar (RLW)

Haryana(GVW)

Karnataka (RLW)

Rajasthan

Gujarat (GVW)

Maharashtra

Registered laden weight

Goods vehicle weight

Registered laden weight

Cost of vehicle

Goods vehicle weight

Goods vehicle weight

Trucks(kg)

Upto 1.2MT

Rs.300 PA

<2000kg

Rs.10000LTT

Upto 3 lakhs

2.5% VC

<7500kg

6% VC

Trucks

<500

Rs.298.50

1.2-6MT

Rs.1200 PA

2000-3000 kg

Rs.15000 LTT

3-6 lakhs

1.10% VC+Rs.4250

7500-12000 kg

8% VC

LMV

Rs.5400 PA+Rs.37800 OTT

500-2000

Rs.298.50+Rs.34/250kg

6-16.2MT

Rs.2400 PA

3000-5500kg

Rs.20000 LTT

6-10 lakhs

1% VC+Rs.7550

>12000 kg

12% VC

MGV

Rs.7500 PA+Rs. 52500 OTT

2000-4000

Rs.502.50+Rs.51.50/250kg

16.2-25

Rs.3500 PA

5500-12000 kg

Rs.1800 PQ

>10 lakhs

Rs.8300+Rs.50/1 lakh

HGV

Rs.12150 PA+Rs.85050 OTT

4000-8000

Rs.838.50+Rs.51.50/250kg

>25MT

Rs.4500 PA

12000-15000 kg

Rs.2200 PQ

Traillers

>8000

Rs.1662.50+Rs.136.50/250kg

>15000 kg

Rs.2200 PQ+Rs.75/250kg

<16500 kg

Rs.12150 PA

Trailers

Trailers

Trailers

>16500 kg

Rs.12150 PA+Rs.450/500kg

<3000

Rs.4000

Rs.500 LTT

4% VC

>3000

Rs.6000

Observations

  • Taxes for trucks and trailers are levied on the basis of either registered laden weight of the vehicle or goods vehicle weight or the cost of vehicle.
  • Rajasthan is the only state with tax levied on the basis of cost of goods vehicle.
  • Tax rates for goods vehicle vary across states and there is no standard prescribed range of weights followed for the purpose of taxation.

Table…Motor vehicle tax for Taxis/Cabs

Vehicle type

Bihar

Haryana

Karnataka

Rajasthan

Gujarat

Maharashtra

Taxi/cab

Rs.7500 for 10 years

Cabs

Rs.100 PSPA

Upto 5 passengers

Rs.100 PQ

Upto 5 passengers

1.25% VC PQ

Taxi

6% VC

5 seats

Rs.550 PA

Rs.7500 for next 5 years

Maxi Cabs

Rs.200 PSPA

>5 passengers

Rs.750PQ

>5

3.7% VC PQ

Maxi Cab

12% VC

6

Rs.650 PA

Meter taxis

Rs.60 PQ

7

Rs.642 PS

8

Rs.562 PS

9

Rs.500 PS

10

Rs.450 PS

  1. Registration Fee

Vehicles are registered with the regional transport officer during the purchase of any vehicle. It is a one-time fee and paid either for registering a new vehicle or any vehicle arriving from out of state. Table…shows the registration fees charged in different states.

Table…Registration Fee for motor vehicles

Registration Fee

state

buses

goods vehicle

2W

4W

Taxi/cab

3W/Autos

Bihar

Mini Bus

Rs.400

LGV(upto 770kg)

Rs.300

Rs.60

Rs.200

Rs.300

Rs.300

Bus

Rs.500

MGV

Rs.400

Stage/contract

Rs.600

HGV

Rs.600

Haryana

Rs.400-Rs.600

LGV

Rs.200

Rs.60

Rs.300

Rs.300

Rs.300

MGV

Rs.400

HGV

Rs.600

Karnataka

Medium passenger vehicle:Rs.400

LCV

Rs.300

Rs.60

Rs.300

Rs.300

Rs.300

Heavy passenger vehicle:Rs.600

MGV

RS.400

HGV

Rs.600

Rajasthan

Medium passenger vehicle:Rs.400

LCV

Rs.300

Rs.60

Rs.300

Rs.300

Rs.300

Heavy passenger vehicle:Rs.600

MGV

RS.400

HGV

Rs.600

Gujarat

Medium passenger vehicle:Rs.400

LCV

Rs.300

Rs.60

Rs.300

Rs.300

Rs.300

Heavy passenger vehicle:Rs.600

MGV

RS.400

HGV

Rs.600

Maharashtra

Medium passenger vehicle:Rs.400

LCV

Rs.300

Rs.60

Rs.300

Rs.300

Rs.300

Heavy passenger vehicle:Rs.600

MGV

RS.400

HGV

Rs.600

Observations

  • Unlike all the taxes discussed earlier, registration fee for different types of vehicles is same across all the states.
  • Buses and goods vehicle only are subjected to variation in tax rates based on medium and heavy passenger vehicle for buses and light, medium and heavy goods vehicle.
  • All types of 2W and 4W are charged the same fee.
  1. Driving License Fee

As per the Motor vehicles Act, 1988 , no person can drive a motor vehicle in any public place unless he/she holds a valid driving license issued. RTO issues different types licenses. It includes learner driving license, permanent driving license, international driving license and licenses for light and heavy motor vehicles. For the purpose of analysis, fee rates of permanent driving license is only considered and the fee rates are given in the following table.

Table…Driving License Fee Rates

Driving License Fees

Bihar

Rs.340

Rs. 200 extra for adding another class of vehicle

Haryana

Rs. 200

Karnataka

Rs.300

includes issue, test, addition of another class of vehicle

Rajasthan

Rs.250

Rs. 200 extra for adding another class of vehicle

Gujarat

Rs.250

Rs. 250 extra for adding another class of vehicle

Maharashtra

Rs.250

test fee & license fee + Rs. 200 for adding another class

Source: websites of transport department, RTO of various states, 2013-14

  1. Permit Fee

State Road Transport Authorities issues permits to the transport and goods vehicles. Permits are issued initially for 5 years. Permit fees are based on the type of vehicles i.e. passengers vehicles, (stage and contract carriage), goods vehicle, tourist vehicles, cabs etc.

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Permit Fee

state

bus

Goods Carriage permit

National Permit (truck)

All India tourist vehicle

Taxi/cab

3w/auto

Bihar

stage carriage

Rs.3100 for 5 years

one region

Rs.1050

5 years

Rs.19550

Rs.2600

Rs.6100 for 5 years

3 to 4 seats

contract carriage

for 5 years

two region

Rs.1250

one region

Rs.1600 for 5 years

one region

Rs.1050

>two region

Rs.2050

two region

Rs.1900 for 5 years

two region

Rs.1250

5 to 7 seats

>two regions

Rs.2050

one region

Rs.1600 for 5 years

Haryana

two region

Rs.1900 for 5 years

Karnataka

stage carriage

Rs.2000

Rs.1000 for 5 years

Bus

Rs.2000

motor cabs: Rs.400

contract carriage

Maxi cabs

Rs.1000

Maxi cab: Rs.600

Bus

Rs.2000

Motor Cabs

Rs.750

Rajasthan

stage carriage

Rs.1000

Rs.500

Rs.150

contract carriage

Rs.1000

Gujarat

stage carriage