The recent adjustment in life tax rates on vehicles in Tamil Nadu, effective from November 9, 2023, follows the approval of a Bill by the state’s Legislative Assembly on October 11, 2023. This legislative amendment, incorporated into the Tamil Nadu Motor Vehicles Taxation Act, 1974, introduces a range of reforms that impact the taxation structure for various types of vehicles.
For new motorcycles, the life tax rate now stands at 10% if the total cost is less than or equal to one lakh rupees (1 lakh) and 12% if the cost exceeds one lakh rupees (1 lakh). This tiered approach aims to align tax rates with the value of the vehicle, providing a nuanced taxation framework.
The life tax rates for new cars and other motor vehicles have also undergone significant revisions. Vehicles costing more than 20 lakh rupees now face a 20% life tax rate. For those priced between 10 lakh and 20 lakh rupees, the rate is set at 18%, while cars falling in the 5 lakh to 10 lakh rupees range are subject to a 13% life tax. Vehicles with a price tag under 5 lakh rupees incur a 12% life tax.
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The bill, introduced by Transport Minister S.S. Sivasankar, extends its impact to used vehicles as well. Life tax rates for pre-owned two-wheelers and automobiles are now structured based on the duration of their service.
Furthermore, the legislative amendment encompasses updated life tax rates for specific vehicle categories, including tourist motor cabs and construction equipment vehicles. Notably, motor vehicles (excluding transport vehicles) registered for 15 years or more will now be subject to a green tax of 1,500 rupees for a five-year period. Additionally, motorcycles registered for over 15 years will face a green tax of 750 rupees over a similar timeframe.
This comprehensive reform underscores the state’s commitment to a dynamic and fair taxation system, taking into account the varying factors such as vehicle type, cost, and usage duration. As these changes come into effect, they are expected to have a significant impact on the overall landscape of vehicle taxation in Tamil Nadu.
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