After the implementation One India - One GST, the Ministry of Road Transport and Highway (MoRTH) is looking to revamp the tax structure and permit regime for public transport in the country. This is much needed reform as the public transport operators are facing huge financial burden and entry barriers to expand the service. UITP has always advocated for the rationalisation of motor vehicles tax and permit regime.
Group of Ministers (GoM) on Transport deliberated upon One Nation- One Tax and One Nation- One Permit in Guwahati, Assam on 20 April 2018. This is a great initiative to attract the investment from private sector. As part of the deliberation, the GoM recommended:
a) A uniform structure of road tax for vehicles across states
b) A national bus and taxi permit on lines of such permit for goods transport
In order to promote alternate fuel for vehicles, the GoM has proposed liberalisation of permit system for electric vehicles. This will enable the introduction of electric taxis and electric auto-rickshaw in different cities. Both Taxi and Auto-rickshaw segment is heavily regulated.
Implication of Motor Vehicles Tax (MVT) on Public Transport
The state governments impose the following taxes on vehicles in use:
• Motor vehicles tax – one-off, lifetime or annual tax (depending on the state) that is calculated using factors such as engine capacity, cost price, seating capacity, horsepower and/or weight
• Passengers and goods tax – tax on the transportation of goods and/or passengers by road
• State entry tax – tax on vehicles purchased in one state but transported into another
Motor Vehicles Tax, also called as Road Tax, in India is imposed by the central and state governments on motor vehicles and road usage. It is calculated on the basis of various factors including engine capacity, seating capacity, unladen weight and cost price.
MV Tax is being levied by all the state governments on all types of commercial vehicles. It is primarily based on ownership and only indirectly linked to consumption. Exceptions are Punjab and Rajasthan where MV Tax is levied based on Distance and Cost of Vehicle respectively. The purpose of the MV Tax is to meet the cost of road construction and maintenance out of the revenue realised from user charges. Tax policy on Road Transport in the country is inherently disadvantageous to the growth of Public Transport. The stage carriages are subjected to payment of MV Tax, Passenger Tax and Special Road Tax etc. and the amounts are different in different states. It varies from 5% in Karnataka to 17.5%in the state of Maharashtra.
(Source: DIMTS Limited)
The incidence of MVT and other taxes are almost engulfing the total revenue and it needs a perusal and consideration for reduction of burden on SRTUs. The State Government has to treat the public transport operations as one of the basic services being provided to the people, on the lines of providing electricity and potable water. Thus, the objective of State regulation in transport sector should be to promote cost effective and comfortable bus services rather than treating these operations as a source for taxation and revenue. Hence, the States should consider reduction and rationalization of Passenger Tax and Motor Vehicle Tax in the country.
The copy of press released by Ministry of Raod Transport & Highway (MoRTH), GOI: