If you have been dreaming of purchasing your dream car, it might be time to pause and think again. The government of Punjab has made car ownership more expensive for the general public. Recently, the Punjab government increased the tax on cars and two-wheeler vehicles by up to one percent. This means the overall cost of these vehicles in the state is set to rise. According to the transport department’s notification, the new motor vehicle tax rates will apply to the actual value of the vehicle.
New Tax Rates and Their Impact on Vehicle Prices
The increase in motor vehicle tax has come just before the festive season, which could impact many buyers. As per the new rate structure, for passenger cars costing up to ₹15 lakh, the tax has been increased from 9 percent to 9.5 percent. This means that the price of these vehicles could go up by approximately ₹7,500.
For four-wheelers costing between ₹15 lakh and ₹25 lakh, the tax hike could lead to an increase of around ₹25,000. This is because the tax rate has been raised by 1 percent to 12 percent for this category. Additionally, the notification has introduced another category for vehicles costing over ₹25 lakh, which will now be taxed at a rate of 13 percent.
Overview of Proposed Tax Increases
| Vehicle Category | Old Tax Rate | New Tax Rate | Estimated Price Increase |
|---|---|---|---|
| Cars (up to ₹15 lakh) | 9% | 9.5% | ₹7,500 |
| Cars (₹15 lakh to ₹25 lakh) | 11% | 12% | ₹25,000 |
| Cars (over ₹25 lakh) | Unknown | 13% | Varies |
| Two-wheelers (up to ₹1 lakh) | 0.5% | 7.5% | Varies |
| Two-wheelers (₹1 lakh to ₹2 lakh) | 10% | 10% | Varies |
| Two-wheelers (over ₹2 lakh) | Exceeds 10% | 11% | Varies |
Government’s Justification
The increase in tax rates for two-wheeler vehicles will see the tax raised from 0.5 percent to 7.5 percent for bikes priced under ₹1 lakh. For two-wheelers costing above ₹1 lakh and up to ₹2 lakh, the tax will be set at 10 percent, while those costing over ₹2 lakh will incur an 11 percent tax rate. All in all, these changes are likely to make vehicles more expensive in Punjab compared to other states.
With this decision coming just before the festive season, the government’s move could shatter the dreams of thousands who have been planning to purchase a vehicle. Many potential buyers might reconsider their plans, prompting concerns about the impact of this tax rise on both consumer spending and the automotive market in the state.
