In a major policy announcement, the Union Budget has emphasized the need to rationalize road tax policies across India, aiming to bring coherence to the fragmented state-level taxation system. Presenting the budget, the Finance Minister highlighted that the current diversity in road tax structures across states has led to inefficiencies in interstate transport, compliance burden, and revenue leakage. The central government now proposes a framework for policy alignment, urging states to adopt common principles that ensure fairness, transparency, and ease of vehicle movement.

The budget outlines a roadmap for encouraging states to shift towards harmonized tax bands, possibly through incentivized cooperation mechanisms. While road tax remains a state subject, the centre plans to recommend a model road tax policy that classifies vehicles based on objective parameters such as engine capacity, emissions, usage type, and price brackets. It also hints at integrating digital payment platforms and centralized data systems to track collections and reduce administrative overheads. The move is seen as complementary to the broader vision of One Nation, One Tax in the transport sector.

Industry experts and logistics operators have largely welcomed the announcement, noting that a rationalized tax regime will simplify operations for fleet owners, manufacturers, and cross-border service providers. However, some state governments have expressed reservations about potential revenue impact and loss of autonomy. The centre has assured a consultative approach, promising that any reforms will be executed through cooperative federalism with full respect for state rights. The final policy draft is expected to be released post deliberations in the Inter-State Transport Council in the upcoming fiscal cycle.