Vehicle tax collections jump 72 percent in Q3

May 03, 2017

The Kathmandu Post, Post Report, 3rd May 2017, Kathmandu

Revenue collection in the transportation sector shot up 72 percent in the first nine months of the fiscal year after taxes under several headings were jacked up sharply.

According to the Department of Transport Management (DoTM), transport offices across the country collected Rs16.13 billion during the first three quarters of 2016-17. Collection totalled Rs9.35 billion during the same period in the previous fiscal.

There was a significant growth in road construction and maintenance tax and driving licence and vehicle registration fees, government data showed.

Taxes were hiked steeply in fiscal 2016-17. Road construction and maintenance tax for four-wheelers went up to 7 percent from 5 percent. This means the buyer of an automobile costing Rs5 million has to fork out Rs350,000 against Rs250,000 before. This is a one-time tax paid at the time of purchase.

Likewise, the road construction and maintenance tax for motorcycles with a capacity of up to 125 cc has been ramped up to Rs10,000 from Rs7,000.

The tax for motorcycles in the range of 126 cc to 250 cc has been increased to Rs12,000, and the tax for motorcycles in the range of 251 cc to 400 cc has been increased to Rs15,000. The tax for motorcycles above 401 cc has been hiked to Rs20,000.

“Moreover, auto imports surged significantly during the first few months of the current fiscal year,” said Mohan Thapa Magar, head of the finance department at the DoTM. According to him, the road and maintenance tax is a one-time tax that is levied at the time of import.

While vehicle imports declined sharply following the six-month economic blockade by India in fiscal 2015-16, there was a buying spree after the blockade was lifted, due to which imports soared.

More vehicles were imported in the first eight months of 2016-17 than in the whole of 2015-16.  Vehicle registrations totalled 2,602,986 during this period, up 11.27 percent from the whole of the previous fiscal year. Vehicle registrations in 2015-16 totalled 2,339,169.

Apart from motorcycles and cars, there was a significant growth in imports of construction vehicles including earthmovers.

Similarly, the charge for acquiring a driving licence has increased twofold with the introduction of the smart driving licence. Charges for two-wheeler and four-wheeler driving licences have been doubled from Rs750 and Rs1,000 respectively.

According to Magar, the fee has been doubled because the validity of the driving licence too has been doubled from five to 10 years. 

“However, this hasn’t happened as an amendment has to be made to the act. The bill to amend the act has been sent to Parliament and we are awaiting its passage,” Magar said, adding that the department would extend the renewal deadline once the law is passed. 

Meanwhile, the DoTM has revised several miscellaneous taxes. “Taxes and fees for various services have been fixed in multiples of Rs50 to eliminate the hassle of small notes and make customer service more efficient,” Magar said, adding that this too had boosted the government’s income.