New amendment makes it possible to get road taxes back when moving out

The Rajya Sabha passed the Motor Vehicles Amendment Bill 2012, making it possible for owners of motorvehicles to claim a refund on their road taxes when they move out from one state to another.

State governments collect road taxes for the full tenure when a two or four-wheeler is registered. Most state governments collect for a 15-year period — the time for which the registration is valid.

However, since many people shift out of a state, they are forced to re-register their two or four wheelers in the new state, requiring them to pay the taxes once again.

Under the Amended Act, anyone who seeks a no-objection certificate (NOC) from the state road transport authority (RTO) will automatically get a refund of the taxes paid by him or her, after subtracting the amount for the number of years already spent in the current state.

Road taxes are imposed to fund the construction and upkeep of roads and range from 5 to 15%, calculated on the showroom price. Often they run up to lakhs of rupees, especially in states like Karnataka, which have very high rates.

The new amendment has added a new section, 49A, which reads as under:

“Where an owner of a motor vehicle (other than transport vehicle) on which one-time or long-term tax has been paid, ceases to reside at the address recorded in the certificate of registration of the vehicle on account of his transfer on official duty or shift of residence, the registering authority shall, where the vehicle was registered prior to such transfer or shift of residence, on application for no objection certificate under section 48, refund the pro-rata unutilized tax; and the registering authority where the vehicle is being shifted shall levy and collect pro-rata tax for the remaining valid period of registration.”