M&M says Maharashtra road tax negates price cuts

Mahindra & Mahindra has raised concerns over the increase in road tax on vehicles by the Maharashtra government saying it would negate the price cuts on vehicles following the rollout of goods and services tax (GST).

Pawan Goenka, managing director, M&M, said, “One small concern that I have is the state road tax going up in one of the states (Maharashtra) right now and I hope that does not become the norm because then the price cut (post-GST) on vehicles will get negated.”

After two days of GST implementation, Maharashtra has raised registration tax on two- and three-wheelers to 10-12% of vehicle cost from 8-10%. Tax on petrol cars has been raised to 11-13% from levied 9-11%. For diesel-powered cars, the registration tax was around 11-13%, which has been increased to 13-15%. For CNG or LPG cars, the tax has been increased to 7-9%, from the earlier 5-7%.

The hike was effected to compensate for the loss of revenue on account of the scrapping of octroi and local body tax following the implementation of the Goods and Services Tax (GST). However, the state government has capped the tax amount for high-end imported cars at Rs 20 lakh as against 20% of the total car cost that was being charged earlier.

Goenka said the smallest price cut in M&M vehicles has been on small diesel vehicles while the highest reduction has been on vehicles which are above 4 metre and above 1.5 litre diesel engines. The cut is in the range of 2-7%.

“So in the case of vehicles with 2% reduction, the increase in road tax by 2% will definitely affect it,” Goenka said.

Different companies have reduced the prices of their products differently.

In Maharashtra octroi was applicable in are Mumbai, Nashik and Pune and these cities will see a greater reduction in vehicle prices post-GST.

Goenka said, “ That situation (octroi) is only in Maharashtra and no other state has it. And if that is the logic then other states should not be following it,” he said.

Mahindra India