The road tax handbook: A complete guide to understanding road tax for vehicle owners in India

economictimes.indiatimes.com:

Road tax or motor vehicle tax or VAHAN tax, or Parivahan tax, is an essential aspect of vehicle ownership in India. Under Section 39 of the Motor Vehicle Taxation Act 1988, every vehicle owner is mandated to pay a specific amount as road tax at the time of purchase of a new vehicle. This fund is used by the government to expand and maintain the infrastructure of the vast network of roads and provide basic amenities like streetlights and road signs. Funds collected are also spent on providing safety measures and emergency first aid in case a driver cannot evade on-road mishaps.

In India, road tax is levied by both the Centre and state governments. However, road tax is essentially a state-level tax since the cost of maintenance of local roads is borne by the state governments. The central and state governments impose road tax in the following ways:Central Road Fund (CRF) tax: This tax includes customs duty, central excise, central sales tax, Goods and Services Tax (GST) and other additional cess based on the model and type of the vehicle. The Central Road Fund (CRF) tax is usually calculated as a percentage of the vehicle's ex-showroom price. This tax is used to expand and maintain national highways. *State road tax: The state government levies yearly or lifetime motor vehicles tax, passenger and goods tax, state vat, and toll tax. This tax varies from state to state. You have to pay road tax to the government of the state in which you wish to own a vehicle. If you shift to another state, you will need to pay the tax to the government of the state you have moved to within a month of moving. Road tax is not paid on travelling from one state to another. *

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