Cars & two-wheelers get more expensive in Punjab as govt hikes motor vehicle tax

27 days ago | 28 Views

The Punjab state government has hiked the motor vehicle tax on passenger cars and two-wheelers, making them more expensive. The taxes have been hiked by 0.5 to 1 per cent and will be applicable on the actual vehicle cost. The hike comes just ahead of the festive season which is a booming period in the Indian auto sector owing to the auspicious time when sales tend to rocket across categories.

New Motor Vehicle Tax on Cars

According to the notification released by the Department of Transport, Punjab, the motor vehicle tax on passenger vehicles costing up to ₹15 lakh has gone up from 9 to 9.5 per cent. This makes the motor vehicle tax paid on the car go up between ₹7,000 and ₹20,000. The price of a four-wheeler costing above ₹15 lakh and up to ₹25 lakh has gone up to 12 per cent from the previous 11 per cent. The Transport Department has added another category of vehicles that cost above ₹25 lakh, which will now attract a tax of 13 per cent, as per the notification.

The Punjab Transport Department has introduced a new category for premium two-wheelers costing over <span class='webrupee'>₹</span>2 lakh that will attract a tax of 11% — The Punjab Transport Department has introduced a new category for premium two-wheelers costing over ₹2 lakh that will attract a tax of 11% **(HT Auto/Kunal Thale)**

New Motor Vehicle Tax on Two-Wheelers

With respect to two-wheelers, the notification states that for models costing up to ₹1 lakh, the motor vehicle tax has been increased from 7 to 7.5 per cent. Two-wheelers costing between ₹1 lakh and up to ₹2 lakh will now attract a tax of 10 per cent. The department has also introduced a new category for premium two-wheelers costing over ₹2 lakh that will attract a tax of 11 per cent.

The new taxes are applicable with immediate effect. The move should make premium mass-market cars substantially more expensive especially compact SUVs priced between ₹15 lakh and ₹25 lakh. With two-wheelers, the premium motorcycle segment between 350-500 cc will see a hike in on-road prices.

The additional tax has been announced as the state government aims to generate more revenue with the sale of new vehicles. However, the announcement also comes at a time when the market is experiencing a slowdown in retail sales, prompting automakers to adjust production owing to low demand. It needs to be seen how the hiked motor vehicle tax will affect car sales in the short term in Punjab.