Cost-Based Tax Calculation

• In many Indian states, road tax is calculated as a percentage of the vehicle’s cost.
  
• The ex-showroom price or invoice value is commonly used as the base.
  
• Higher-priced vehicles attract proportionately higher tax amounts.
  
• This model ensures that luxury vehicles contribute more to infrastructure funding.
  
• The percentage may vary from 4% to 15% depending on the state.
  

Price Slabs for Tax Rates

• States often divide vehicle prices into slabs to apply different tax rates.
  
• Vehicles below a certain price point fall into the lowest bracket.
  
• Mid-range vehicles are taxed at moderate percentages.
  
• High-end vehicles exceed thresholds and enter the top tax slab.
  
• Slab thresholds and rates differ from one state to another.
  

Luxury and Premium Vehicle Taxation

• Premium vehicles such as SUVs and luxury sedans face the highest road tax.
  
• Some states impose additional cess or surcharge for costly vehicles.
  
• High taxation is intended to offset the road usage and environmental impact.
  
• Imported vehicles often fall into the highest tax category.
  
• Vehicle cost is the most influential factor for high-end tax calculation.
  

Impact on Overall On-Road Price

• Road tax significantly increases the total cost of vehicle ownership.
  
• It is paid over and above the vehicle price, GST, and insurance.
  
• Buyers of expensive vehicles must account for the higher upfront tax.
  
• Some buyers opt for registration in states with lower tax rates.
  
• Total cost may vary substantially depending on state tax policies.
  

State-Wise Variations

• Maharashtra, Karnataka, and Telangana follow cost-based tax structures.
  
• Delhi applies fixed rates for different engine capacities but not vehicle cost.
  
• Tamil Nadu applies slab rates based on vehicle cost thresholds.
  
• The same vehicle can attract a different road tax in two different states.
  

State-specific tax rules impact affordability and registration decisions.