Cars, bikes to become costlier in Tamil Nadu as govt hikes taxes

Cars in Tamil Nadu are set to get expensive as the state government has announced a significant increase in tax rates for new vehicles. The hike, which includes two-wheelers and other vehicles is expected to raise overall vehicle costs in the state. Shared-autos, taxis, and trucks will also be impacted, potentially leading to higher freight and commuting expenses.

The amended TN Motor Vehicles Taxation Act, 1974, will now impose a 12% lifetime tax on two-wheelers priced above Rs 1 lakh, up from the previous 8%. Consequently, buyers who previously paid ₹9,600 as tax will now bear a burden of ₹14,400. Similarly, cars falling within the price range of ₹5 lakh to ₹10 lakh will be subject to an 18% tax, while those exceeding ₹20 lakh will face a minimum tax of ₹4 lakh, representing a 20% hike.

These tax hikes compound the existing financial strain on vehicle owners, who are already grappling with registration charges, green taxes, insurance premiums, and handling fees. Industry insiders, including S Rajvel, the state chairperson of the Federation of Automobile Dealers Association, express deep concern. Rajvel points out that neighbouring states do not impose such high taxes, and the automobile industry in Tamil Nadu is likely to suffer. He further emphasizes that vehicle prices have surged by 40% in the past year alone, making any additional cost increase detrimental to sales.

Beyond new vehicle registrations, these tax changes also impact vehicles entering Tamil Nadu from other states. Commercial vehicles, in particular, face nearly double the standard tax rates. Share-auto and taxi owners are now required to pay ₹6,000 as tax for five years. However, this move has faced opposition from S Anbalagan of the TN Auto and Taxi Drivers' Association, who argues that they are already losing significant revenue to aggregators like Ola and Uber.

Truckers, represented by S Yuvraj of the TN Sand Lorry Owners' Association, voice their concerns, emphasizing that this tax hike will further increase the prices of transported commodities. Rising costs of diesel, toll prices, and maintenance expenses have already led to around 30% of registered trucks being non-operational, impacting the transportation of goods across the state.

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