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As per the Finance Act No 16 of 1995, an annual tax should be paid by the registered owner of the vehicle for seven years since its initial registration. The first installment of these taxes is charged with the first registration of the vehicle by the Department of Motor Traffic.
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The remaining installments are charged by the insuring entity when obtaining the annual insurance cover and will be sent to the Treasury. Transport Ministry says the total due amount of this tax is above 350 million rupees, even though there is a penalty charge of 50 percent for late payments.
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Considering that such omissions may be due to reasons beyond the control of vehicle owners, the ministry is declaring this concession while charging only 5 percent of the penalty. Accordingly, the luxury tax is applicable to diesel motor cars exceeding 2500 cc and petrol motor cars exceeding 2000 cc and charged based on the date of registration of the vehicle.
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A semi-luxury tax is charged from diesel motor cars from 2201 to 2500 or diesel jeeps exceeding 2200 cc and petrol cars from 1801 to 2000 cc or petrol jeeps exceeding 1800 cc. Semi luxury tax (dual purpose) is applicable to diesel cabs exceeding 2200 cc and petrol cabs exceeding 1800 cc.
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However, ministries and departments, UN and all its agencies, all diplomatic missions and gazetted international organizations are exempted from these luxury taxes.
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