What is Road tax?

Road tax is a tax to be paid periodically on motor vehicles for using the public roads. Road tax is imposed in India by the central and state government and also by the local bodies.

If the vehicle is used in a state which is not the one where it was registered, then lifetime tax has to be paid again in the state where the car is being used. The state entry tax is also to be paid. After registration, all the road taxes are to be paid at the RTO (regional transport office) in your area.

Road Tax Refund

Are you looking for the Refund of Road Tax amount paid originally to RTO? Here is a quick round up for you to know the process applicable after registering the vehicle in the new state.

Process of Road Tax Refund

Only after the Vehicle is registered in New State, the Tax Refund can be applied. Following documents/forms are to be submitted for the refund of Road Tax.
  • Notarized copy of New Smart Card & Original or Notarized copy of Old Smart Card (as available)
  • Imprint of Car Chassis
  • NOC of State Transfer (Photocopy)
  • Copy of New Insurance & PUC
  • Photocopy of receipt of New Road Tax Paid
  • Receipt of Road Tax paid originally in First State where vehicle was registered
  • RTO Form DT, RTO Form 16 as application for Tax Refund
  • New Address Proof as Proof of Migration along with ID Proof
  • Request letter for refund along with Bank Account Number / Address on which cheque needs to be sent
  • (Only applicable in Karnataka) New Registration Authority has to send CRTI Intimation that vehicle is registered in New State
To the original RTO Office where vehicle is registered, all these have to be submitted with Notarized Copies of Photocopy with self-affixed stamp of equivalent value of Registered Post on it

FAQs on Road Tax Refund

Question: Will Tax Refund be applicable, if buying a Used Car and registering it in the New State?

Answer: No – Tax Refund is not applicable on such cars and hence, is not payable to Second Owner (or subsequent owners). The tax refund can only be applied by the Original Owner. The tax refund is not applicable in case you are not the First Owner and buying a car for re-registration in another state.

This is applicable in Company Cases also – where the car is given to employees for usage and later they are asked to buy it back. As per RC, the employee will be the second owner – the Tax originally paid by the Company will not be payable.

The Guidelines for refund of road tax is subject to be refunded
  • Only in the name of original owner who has initially paid the road tax
  • Provided that the original Owner who registers the vehicle takes NOC (No Objection Certificate) for shifting the vehicle in other State on his/her name and re-registers the vehicle in his/her name.
Thus for the refund of tax, in the first and second state, the name of Original Owner should be same.

Question: Is there a Time Limit for applying for Tax Refund?

Answer: Yes – but each state has a different timeline. For example in Maharashtra – RTO can decline the Tax Refund Application if it is submitted after 6 months of obtaining the State Transfer NOC.

Question: Is Road Tax Refund applicable, if the vehicle is not registered in New State but only the Tax is paid in New State?

Answer: No – in such a case Road Tax will not be refunded. Either the vehicle has to be mandatorily registered in the new state or the Old Registration has to be cancelled. Only after that the refund application will be accepted for payment of Tax Amount on Pro Rata basis.

As per Motor vehicle Act, then only in following cases car registration can be cancelled by RTO:
  1. If the vehicle is destroyed or is rendered incapable of use permanently
  2. If the Vehicle is moved in other state and is re-registered in the New State with required confirmation and documents, given that the same has been furnished
  3. If RTO observes that the vehicle is in a condition that it is inept of being used or its use would create a danger to the public
  4. If the registering authority is satisfied that the vehicle has been removed permanently out of India
  5. If the Documents of Car Ownership are found Fake or with Forgery at a later date
Question: What is the Basis of Road Tax Refund Amount?

Answer: Refund of Road Tax will be Pro rata basis of 15 years based on the registration date till the date of application for refund. For example – if you apply after 5 years, then approx. 66% of original road tax paid will be refunded. Based on Road Tax Amount, the Pro Rata is done. Smart Card registration fees and State MCD Parking Fees is not refunded.

Question: Is Tax Refund Process Online? Is Tax Refund applicable in all States?

Answer: No – Unfortunately as of now, no Online Process for Tax Refund is available. The documents are to be submitted to RTO in person.

Yes – It is irrespective of the Metro Cities like Mumbai, Delhi, Hyderabad and Bangalore. Even if you are from Tier – II, Tier – III cities, tax refund can be applied.