As the entire country braces for bad days in the auto sector, Jammu and Kashmir has an added problem: an order of the Transport Department (SRO 492 dated August 1 issued by the Transport Department, J&K government) levied heavier taxes for registering vehicles.
Calling this an “unjustified hike of taxes levied on motor vehicles”, Manish Gupta, secretary general, Jammu Chamber of Commerce and Industry (JCCI), said that the auto sector was already weighed down by economic factors and this “political” decision added to the problems.
The new tax law states that the “Tax shall be levied on motor vehicles using any Public road in the State of Jammu & Kashmir at the rates specified against each, namely all motor vehicles—one-time tax @9 per cent of the cost of the vehicle. Motorcycle costing above 1.5 lacs—one-time tax @10 per cent of the cost of the vehicle.” A senior administration official told Frontline that Jammu and Kashmir had a very narrow tax base and the new tax was to make enough money available for accident victims. “We will discuss with chambers and see what can be done,” he said.
Rakesh Gupta, the JCCI president, said that the authorities were not clear on the definition of cost. In the neighbouring States of Himachal Pradesh and Punjab, the rates varied between 3 and 6 per cent as registration fee, which is charged on the basic cost without GST. In Jammu and Kashmir, it is being levied on the total cost (that is basic cost + GST). This tax would amount to between Rs.45,000 for a vehicle costing Rs.5 lakh and Rs.2,92,500 for a vehicle costing Rs.32.5 lakh. “We wonder if this can be called discrimination as both users would be using the same road. Further, going through the data of the National Informatics Centre (NIC), the tax collected by the Transport Department for the financial year 2018-19 was Rs.177 crore, which works out to less than 2 per cent of the total turnover of the automobile industry of Jammu and Kashmir, which is approximately Rs.10,000 crore,” he said.
This would kill the dealerships in the area, he feared. “We have noted that with the incidence of increased RTO tax, customers have avoided/deferred the purchases of motor vehicles across all dealerships in Jammu and Kashmir, which has resulted in a 90 per cent drop in sales in the month of August,” he said.