On Road Price
Have you ever wondered why your car didn’t come with an MRP tag? Why prices in different cities are different for the same car?
To understand this we need to understand various prices associated with a car.
There are basically three price points associated with a car.
- Ex- Factory Price
- Ex-showroom Price
- On Road Price
Now let us see the above prices in detail
- Ex-Factory Price: This is the price the dealer pays to the manufacturer, to get the car at the showroom.
- Ex-showroom Price: The price at which a customer can buy the car from the dealer. This includes Dealer Margin, Transportation Costs, Excise duty and State Taxes incld Octroi.
On Road Price (OTR): As the name suggests it is the price a customer pay to put the car on road. To put a car on road you need to register it under your name (car is assigned a unique Registration number by the RTO), pay road tax and mandatory insurance. This include Ex-showroom Price + Registration charges + Life time Road Tax + Insurance. Once this price is paid your car can be legally put on the road.
Taxes Applicable on a car
It can be observed that the Lifetime Road tax contributes a major share of the taxes you pay on your car and interestingly there is a huge variation in Road taxes from city to city or state to state.
Let’s do a compare of Road Tax in some of the major cities of India. Let’s start from the southernmost city, the hometown of super star.
Chennai is known as the ‘Detroit of South East Asia’ for its automotive industries, as it houses automotive majors like Hyundai, Ford, Renault-Nissan, BMW, Daimler, Mitsubishi and Royal Enfield. Tamil Naidu Government levies 8% of the ex-showroom price as the lifetime road tax.
Bangalore known as ‘The Garden City’ has one of the highest density of cars in the country. A lot of clamor is being made by the non-KA vehicle owners against Karnataka Government hunting non-KA vehicle and insisting them to pay life time road tax. Being the major IT hub of the country coupled with multifarious businesses Bangalore has one of the highest floating crowd populations in the country. Lot of car owners are being harassed in his regard by the RTO and cops. A recent initiative started by a group named ‘Drive without Borders’ has gained moment and we hope this harassment comes to an end soon. Incidentally Karnataka state levies the highest road tax in the country. The exchequer levies 15% on cars with value less than INR 5 lakhs, 1`6% for cars in the price range of INR 5-10 Lakhs, 19% for cars in INR 10-20 Lakhs and hold your breath it’s a whopping 20% for cars more than INR 20 Lakhs.
Now let’s see the tax structure at ‘City of Joy’. The Life time road tax in Kolkata is based on the engine size. Bigger your car’s heart, you end up paying higher tax.
Delhi, the capital city has the lowest road tax in the country. For easy understanding please refer to the table below.
Also Municipal Corporation of Delhi collects a onetime parking fee of Rs 2,000 for cars below INR 4 lakhs and INR 4,000 for cars above INR 4 lakhs
Let’s see the Road Tax structure in India’s economic capital. The tax persisting in Mumbai is as below:
In addition to the same an Octroi @ 4.5% is applicable to cars registered in Mumbai.
Life Time Road Tax for two popular cars across 5 metro cities
For a quick comparison of taxes in several of the above said cities let’s take see the road tax applicable on two very popular cars Maruti Swift VDi and Toyota Fortuner 4X4 MT. We have taken ex-showroom price of Maruti Swift VDi as INR 6.42 lakhs and INR 23.50 lakhs for Toyota Fortuner 4X4 MT. We have not taken the variation in ex-showroom price that arise due to variation in VAT, Cen-vat, Octroi and other taxes city to city to maintain uniformity and ease of analysis of the effect of road tax on the On The Road price of the car.
Maruti Suzuki Swift VDi
Toyota Fortuner 4X4 MT
[Please note that the prices of vehicles are approximate and is taken into consideration for analysis purpose only.]
In both scenarios we find that Road tax is highest in Bangalore, followed by Mumbai and then by Kolkata, making it the cheapest in the India’s Capital – Delhi.
From comparing the Road taxes in various cities we see that there is a huge variation in the structure and amount of road taxes all across the country. It’s high time that the Central Government brings uniformity in the road tax in the country and it should also look into the situation where many owners are forced to pay Life time road tax, when they migrate from one state to the other.