Under the new regulations, vehicles with an engine capacity between 1,000 and 2,000 cc will be taxed at 2% of their invoice value. For vehicles with an engine capacity exceeding 2,000 cc, the tax rate will be 3% of the invoice value.
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Additionally, the lifetime token tax for vehicles up to 1,000 cc has been raised from Rs. 15,000 to Rs. 20,000. When ownership of a vehicle up to 1,000 cc is transferred, the new owner must pay the full token tax again. If the ownership transfer occurs within 10 years of purchasing the vehicle, the new owner will pay the lifetime token tax with a 10% annual discount. Beyond 10 years, the lifetime token tax does not apply.
These changes are expected to significantly impact car owners financially, particularly in the used car market. The shift from engine capacity-based taxation to an invoice value-based system may lead to higher taxes for newer, more expensive vehicles. This policy aims to boost tax revenue and promote transparency in vehicle transactions. However, it imposes an additional financial burden on vehicle owners, especially those purchasing high-value vehicles. Consequently, this change may alter buying behaviors, with buyers potentially opting for less expensive vehicles to reduce tax costs.
