The UT transport department is recommending a 3% increase in road tax for both four-wheelers and two-wheelers starting in August, which might result in city residents having to pay extra for the purchase of traditional fuel-based cars. However, owners of electric vehicles are free from this fee.

The action comes two days after the UT government was forced to reverse its proposal to impose a strict registration restriction on two-wheelers powered by petrol. The administration had intended to register electric and conventional two-wheelers at a ratio of 70:30 in 2023, but after receiving strong criticism, it was compelled to lower the objective to 35:65, permitting the registration of 65% non-electric two-wheelers in the current year.

The implementation of the increased road tax is expected start from next month following the governor’s nod. A meeting in this regard is expected to take place in the next two weeks.

What you pay?

For four-wheelers priced at ₹20 lakh and above, the road tax will be raised from 8% to 11%, while for vehicles costing below ₹20 lakh, the tax will increase from 6% to 9%. For two-wheelers costing less than ₹1 lakh, the tax has been increased from 3% to 6% while for two-wheelers priced between ₹1 lakh and ₹4 lakh, there is a tax increase proposed is 7%, from the current 4%.

Transport director Pradhuman Singh said the road tax is being increased in the city after nearly a decade. “The proposal aims to align the tax rates with those of the neighboring states. He also mentioned that due to the lower tax rates in Chandigarh, people from neighbouring cities often get their vehicles registered in Chandigarh after completing a house rent-lease agreement.”

Currently, the tax rates for fuel-based vehicles in Chandigarh are lower than both Punjab and Haryana (see box). Every month, approximately 2,000 four-wheelers and an equal number of two-wheelers are registered in the city.

On the other hand, in an effort to promote electric vehicles, the UT administration has completely waived the road tax on electric and hybrid vehicles. The Electric Vehicle (EV) Policy 2022 was implemented in September last year with the goal of making Chandigarh a “Model EV City” and achieving zero-emission vehicle (ZEV) status among all Indian cities within five years.

According to a recent notification issued by the UT transport department in May, road tax has been waived for battery-operated vehicles of all categories and electric and hybrid vehicles (strong hybrid and plug-in hybrid) from March 18, 2023, to March 17, 2028. Hybrid vehicles ranging from ₹18 lakh to ₹1 crore are included in this exemption. The road tax for a vehicle worth ₹18 lakh is approximately ₹78,000, Singh added.

As part of the EV promotion efforts, the administration has also decided not to levy registration fees on electric vehicles for five years, while owners of vehicles running on conventional fuels are required to pay both road tax as well as registration tax.

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