Stop! Govt may tax that extra car

BE PREPARED to pay additional tax on the second car you buy. The urban development ministry has proposed to levy a cess, over and above road tax and VAT, on every second car in a household. This would come as a major dampener for car owners in metros like Delhi and Mumbai — Delhi has around 20 lakh cars while Mumbai has around 16 lakh. The proposal is being deliberated by the state governments, and state secretaries are slated to meet on April 14 for a discussion on it. The ministry has proposed a 2-3% cess, but a final call on the rate will be taken at the state level. The proposal has two long-term objectives — curb usage of private vehicles to control vehicular congestion in cities and popularising public transport. “It has been proposed to collect the tax and pump it into a special fund, which would invest in high capacity buses for public transport. The need of the hour is to create transport infrastructure in the cities, but it would not be possible unless we take such stringent measures like taxing the extra vehicle,” a government official said. As per the plan, officials will check whether the car is the first purchase or not at the time of registration. The sources said it would not be easy to get around the law as the matter would be investigated at the RTO itself. The Delhi government is learnt to have been considering the proposal favourably. “We have already created a dedicated multimodal transport special purpose vehicle to invest in high quality transport system in the state in the wake of Commonwealth Games 2010,” a senior Delhi government official said. The Haryana government is also mooting the proposal as the state has outlined many transport development programmes, including a metro link in the state. “The need to explore various alternatives to control congestion by ever increasing number of private vehicles has been voiced at many forums. The problem is particularly critical in the national capital region (NCR). It is broadly felt that it can be addressed by incentivising use of public transport and at the same time disincentivising purchase of private vehicles than required,” Haryana transport minister Randeep Singh Surjewala said.

Courtesy: EconomicTimes