Sikkim proposes major overhaul of vehicle tax structure to boost state revenue

The Sikkim government will introduce a comprehensive revision to the state's vehicle tax structure, aiming to boost state revenue while aligning taxes with current vehicular standards. 

The proposed changes which cover a wide range of vehicles, from two-wheelers to luxury tourist vehicles, marks a significant shift from the current rates, with some categories seeing more than a doubling of their tax obligations.

One of the key areas of focus in the proposed revision is the tax structure for two-wheelers. Under the new system, vehicles with engine capacities up to 80cc will face a tax increase from the current Rs 150 to Rs 500, a substantial 233 per cent rise in taxes for entry-level two-wheelers, which are typically favored by younger riders or those seeking affordable transportation options.

For two-wheelers with engine capacities ranging from 81cc to 170cc, the tax will increase to Rs 750, compared to the existing Rs 300. 

The government believes that this increase is justified as it aligns with both the power and utility of vehicles in this category, many of which are used for longer commutes and more frequent usage.

The highest-capacity two-wheelers, those with engines above 170cc, will now see a tax of Rs 1,500, up from Rs 600. This category includes premium motorcycles, often used for touring and adventure purposes. 

The government’s decision to implement a higher tax rate reflects the growing popularity of these vehicles and their heavier toll on road infrastructure.

The revision also targets motor cars and jeeps, which form a significant portion of the vehicles on Sikkim's roads. For vehicles with engine capacities up to 900cc, the proposed tax will double, from Rs 1,500 to Rs 3,000. This category primarily includes compact cars, often used by families and urban commuters.

Mid-range cars and jeeps with engine capacities between 900cc and 2,000cc will now face a tax of Rs 5,000, up from the previous Rs 3,000. This category includes a large number of family sedans and mid-sized SUVs, vehicles that have become more prevalent in Sikkim in recent years.

For vehicles with engine capacities above 2,000cc, which includes premium SUVs and high-performance cars, the tax will increase to Rs 10,000 from the current Rs 4,500. This more than 100 per cent increase is intended to reflect the higher road usage and environmental impact of these vehicles, which tend to be larger, heavier, and less fuel-efficient.

The commercial vehicle sector will also experience a significant overhaul under the proposed tax revisions. Maxi cabs, a popular mode of transport in Sikkim's hilly regions, will see their tax rates increase from Rs 3,000 to Rs 6,500. Contract carriages and other vehicles used for commercial transport, particularly those in the tourism sector, are expected to experience similar hikes, depending on their size and seating capacity.

Luxury tourist vehicles, which play a crucial role in Sikkim's tourism industry, will now be taxed at Rs 10,000, a steep increase from Rs 4,000. This is in line with the state's broader strategy to capitalize on the tourism industry while ensuring that the infrastructure burden placed by these vehicles is adequately compensated through taxation.

Even emergency service vehicles like ambulances will not be exempt from the revised tax structure. Under the proposed changes, ambulances with engine capacities up to 1,500cc will be taxed at Rs 3,000, while those with capacities between 1,501cc and 2,000cc will be taxed at Rs 5,000. Ambulances with engines over 2,000cc will see their tax rise to Rs 7,500. While the tax on emergency vehicles is a point of contention, the government has justified it as part of its broader policy to ensure all vehicles contribute to state revenue and road maintenance.

The Sikkim government has framed these proposed revisions as necessary to address the growing demands on the state's road infrastructure. With an increasing number of vehicles, both personal and commercial, on Sikkim’s roads, the state has seen a rise in maintenance costs for its hilly, often challenging, terrain. The government argues that a tax structure based on vehicle type and engine capacity is the most equitable way to ensure that users contribute proportionately to the upkeep of public infrastructure.

The government also points out that, in comparison to other states, Sikkim's previous vehicle tax rates have been relatively low, and the proposed changes are in line with modern taxation standards seen across India.