Tax hike likely for motorcycles, reduction on cards for buses

Thiruvananthapuram: The Motor Vehicles Department has proposed to increase taxes on motorcycles that cost more than Rs 1 lakh in the upcoming state budget.

Currently, motorcycles that cost up to Rs 1 lakh have a tax of 10%. This may not change. However, bikes priced above Rs 1 lakh and up to Rs 2 lakh will see a tax hike from the existing 12% to 13% if the proposal is accepted.

Motorcycles priced above Rs 2 lakh will see a tax increase from the existing 21% to 22%, according to the proposal submitted to the finance department.

Motorcycles priced between Rs 1 lakh and Rs 2 lakh are sold in large numbers and a hike of 1% in taxes could help the government fetch Rs 80 crore a year.

However, the increase in taxes could be a concern for both buyers as well as motorcycle makers. These days, even 150cc bikes are priced above Rs 1 lakh. Besides, even the lower variants of new generation 350cc bikes have a starting price just below Rs 2 lakh and goes up to above Rs 2 lakh.

The department has sought a reduction in taxes levied on stage carriages. Two years ago, 25,000 private buses were in service in the state. The number has gone down to 5,500 now with the coronavirus pandemic hitting the sector badly.

Stage carriages have to pay around Rs 1.10 lakh a year, with a quarterly payment schedule.

The department has proposed a reduction of 30% in the tax and a monthly payment schedule for owners instead of four times a year.