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Are car owners being fleeced?

By Veeresh Malik, Outlook Money
May 09, 2006 09:53 IST
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Motor vehicle tax or 'road tax' is collected from buyers directly by the manufacturers or dealers. It is a vast sum of money -- for an upper-end private car, it can run into a lakh. Collected on 'life basis,' the tax is for 10 years or a 'fitness' period of 15 years. After that the car has to be re-registered, and more tax paid. For commercial vehicles, it is higher.

This tax is supposed to be based on the ex-factory manufacturing cost, plus excise duty, sales tax/VAT. Manufacturers are, however, charging buyers on the basis of ex-showroom cost, which is higher. It might still be acceptable, if the higher tax was reaching the government. But is it? Letters to manufacturers, as usual, elicit no response.

And the dealers are unwilling or unable to provide the ex-factory cost.

Meanwhile, an 'off-the-record' chat with an RTO official in Delhi revealed that the rot is much deeper. An amount lower than what is paid by the buyer reaches the RTOs. And often, the tax does not even reach the RTO coffers. The game involves big players, so even manufacturers keep quiet.

It is high time the payment of RTO tax was made directly by the buyer -- through a cheque or demand draft -- to the RTO or other government treasury and a proper receipt issued.

In the interim, do take out the original purchase documents of your car and re-confirm how much road tax was actually paid in your name, on what basis and to whom (I'm grateful to reader Gajendra Singh of Pune for this lead).


In a welcome move, the ministry of petroleum and natural gases has come down hard on the retail sales of petrol and diesel. While most of the steps tally with what the ministry has promised for some time -- like availability of unadulterated fuel in correct quantities -- there are some steps that are quite pro-active.

The first links the colour of the fuel with its purity. Fair enough, good attempt, but as customers we are not in a position to see the colour of the diesel or petrol.

One possible suggestion is for a glass window to be set in the dispensing unit so that the customer can see the colour of the fuel. If petrol is supposed to be a particular shade of yellow, then a filter of the same colour would make it appear colourless. Any adulterant would change the 'aspect' of the fuel. And we would be able to see this from our vehicles.

The next deals with audits on quantities of fuel. At many filling stations, this means a scribbled note on a blackboard about tank quantities and, even worse, a scribbled note on a small cash receipt about the supply done. This leaves enough room for manipulation of stocks -- adulterants can be added and calculations of fuel cost are left to the devices of whoever is scribbling the quantities.

A proper cash receipt generated directly from the dispenser would instead provide a higher level of checks, internal audits and customer confidence. It would automatically generate the date, time, amount, cost, details of the filling station, vehicle number, sales tax and even contact details in case of complaints.

At the back end, an automated receipt would update stock levels as well as provide real-time data in case adulterants are added.

Too far fetched for India? Not so. It is already being done by the private oil companies. Which is why if you talk to long-distance taxi operators, they are clear on where they choose to take fuel from. People understand the integrity that underlines automation -- Indian Railways computerised ticketing is a perfect example.
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Veeresh Malik, Outlook Money

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