Road Tax on GST component of invoice value of vehicles
Transport Deptt flagged issue, Finance Deptt mute
Mohinder Verma
JAMMU, Aug 20: In what can only be described as blatant fleecing of the public, the Jammu and Kashmir Government continues to charge Road Tax on the GST component of vehicle invoice value despite a clear directive from the Union Ministry of Road Transport and Highways (MoRTH) prohibiting such practice. Shockingly, even after the issue was formally flagged to all concerned authorities, the Finance Department has neither acted nor even responded to the Transport Department’s official communication, leaving vehicle owners at the mercy of an illegal taxation regime.
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The MoRTH notification dated August 26, 2021 unambiguously states that Road Tax for fully built non-transport vehicles must be calculated electronically through the portal on the basis of invoice price excluding Goods and Services Tax (GST). Yet, in J&K, officials continue to collect 9%-10% Road Tax on the aggregate invoice value including GST effectively forcing citizens to pay tax on tax.
Other States and UTs-including Punjab, Gujarat, Sikkim, Pondicherry, Arunachal Pradesh and Mizoram-have long aligned with the MoRTH directive. But J&K has chosen to flout the Union Government’s order with impunity, raising serious questions about the accountability and intent of the Finance Department.
The malpractice traces back to a Finance Department order of November 18, 2019, directing Road Tax to be charged on the aggregate cost (basic cost + GST) and in the light of this clarification, the Transport Department is charging one time Road Tax at the time of registration of vehicles calculating the same on aggregate invoice value-the cost plus GST charged thereon.
The MoRTH notification further states that motor vehicle tax levied by States or Union Territories at the time of registration of Bharat Series (BS) non-transport vehicles shall be calculated on the invoice price only. “This effectively creates two sets of rules in J&K-one for vehicles registered under the BS Series and another for those registered with local numbers-which is arbitrary and cannot be justified in any manner”, sources said.
“This is deliberate exploitation”, fumed experts in the automobile industry and general public, adding “by continuously ignoring the MoRTH notification, the Government is squeezing lakhs of rupees from citizens unlawfully”.
Calling the prevailing situation as brazen exploitation, they said, “charging 9% or 10% Road Tax on GST means the Government is taxing a tax. It’s unlawful and it’s hitting the common man hard”, adding “the additional burden is pushing up vehicle prices, operational costs and ultimately inflating the prices of goods and services”.
According to the official sources, the Transport Department, after receiving widespread complaints, wrote to the Finance Department in the month of January this year seeking immediate clarification. But instead of acting, the Finance Department has chosen silence. “This deliberate inaction is as good as complicity. By refusing to even respond, the Finance Department is endorsing the unlawful practice and betraying public trust”, they added.
Federation of Automobile Dealers Association (FADA) vide communication dated January 14, 2025 requested the Principal Secretary to the Government, Finance Department to reconsider imposition of Road Tax on aggregate cost inclusive of GST.
“The Union Territory of Jammu & Kashmir, with its challenging terrain and limited connectivity, has long struggled with infrastructure issues. Vehicle owners are already facing difficulties due to high cost of vehicle, high fuel prices, high maintenance costs and long travel distances. Levy of Road Tax on GST component is adding fuel to these concerns, particularly for those residing in remote and border areas, where transportation is essential for reaching out to essential services”, the FADA had brought to the notice of the Finance Department.
“In view of these circumstances, it would be prudent for the Government to reconsider this decision of levy of Road Tax on GST component of invoice value of vehicle in the interest of general public”, the Association had requested the Principal Secretary.
But, till date no serious efforts have been made to undo the wrong committed by way of Finance Department order dated November 18, 2019. The citizens and experts alike have demanded urgent intervention to end what they call a tax on tax scenario. “Every single day the Finance Department delays a decision, thousands of vehicle buyers are robbed of their hard-earned money”, they said.
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