J&K Govt hikes token tax on automobiles

9% uniform road tax on all sorts of motor vehicles | 10 % on motorcycles above Rs 1.5 lakh
J&K Govt hikes token tax on automobiles
File Pic: Mubashir Khan/GK

In a move that will sharply hike the prices of automobiles, Jammu and Kashmir government on Thursday announced increase of road tax on all sorts of motor vehicles in the state.

As per an order of the transport department, a one-time taxof 9 percent will now be imposed on the total cost of vehicle using any publicroad in the state, which includes both private cars and commercial vehicles.

As per the order, motorcycles costing above Rs 1.5 lakhswill be now imposed 10 percent tax of the total cost of the bike. The transportdepartment order was issued after increase in road tax was approved by theState Administrative Council (SAC) during its recent meeting said anofficial. 

Prior to the tax hike, vehicles upto 1400 cc capacitycosting would attract only Rs 6000 road tax in the state. Vehicles above 1400cc capacity such as high-end cars and sports utility vehicles (SUVs) used toattract Rs 20,600 road tax. However, the new tax rate is placed in such amanner that for instance a car costing Rs 4 lakh would now attract Rs 45,000road tax.

Speaking with Greater Kashmir, state transport commissioner,SP Vaid said increase in road-tax was a step to make it similar to existing taxrate in rest of the country. Vaid said hike in road tax will also prove to be adeterrent for practice of bulk purchase of private cars in less price for theirusage outside the state.

"Earlier tax rate was not in uniformity with road taxes inrest of the country. Also due to low tax rate a lot of people used were indulgingin mass purchase of cars from here to be used outside the state. The focus isto also encourage more use of public transport," said Vaid. Responding to aquestion that whether increased road tax will be a burden on transporters suchas bus owners, Vaid said government has recently announced several "welfareschemes for public transport owners such as bus owners to purchase newvehicles". 

Meanwhile, many local automobile dealers told GreaterKashmir that the decision to hike road tax will have an immediate impact onautomobile sales especially private cars in the state. However, the dealersfeel impact of tax hike on sale of cars will be a "short-term one".

"Car sales have been already down due to a pan-India slumpin automobile market. Also many leading car manufacturers have recentlyincreased prices of several models which has affected sales. There willcertainly be an impact on the buying decision of prospective car buyers forsome time but we hope sales will be back to normal soon as our state is knownfor robust car sales despite  localchallenges such as prevailing situation," said an executive of an Kashmir-basedautomobile dealership.

During last few years, despite low business confidence andsentiment prevailing in the state, cars sales have been witnessing sharpincrease, thanks to availability of easy bank finances and declining publictransport in the valley.  As per a marketsurvey conducted by J&K Bank, Kashmir's car business has been growing at anannual rate of 15-20 percent. The survey also says that 90-95 percent businessof Rs 900-crore yearly car sales come through bank finances. The finance basedcar sales, which was about Rs 800 crore in 2018 as per the survey is expectedto touch Rs 1000 crore by the end of 2019. Automobile dealers say every month2000 to 3000 new cars are rolled out by various dealerships across Kashmir.Most popular cars in demand are the ones priced between Rs 2.5 lakhs to Rs 3lakhs.

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