An autonomous research institute under the Ministry of Finance


Passenger and Goods Tax for Delhi : Pros and Cons

Publication date

Jan, 1995


Report submitted to the Government of National Capital Territory of Delhi.


Tapas K. Sen and O. P. Bohra


The report examines the system of motor vehicle taxation in Delhi with the objective of analyzing the aspects of economic efficiency, equity, administrative feasibility and inter-state comparability of introducing passenger and goods tax in Delhi. The study also examines the issue of the levy of such a tax on vehicles registered outside the State, by using Delhi roads, and makes an estimate of additional revenue generation from the tax at suggested rates. It also reviews the issue of road congestion and vehicular pollution in this context. The study concludes on the basis of the theoretical principle of user charges, likely incidence pattern and a comparison of taxes on motor vehicles in Delhi and four northern States of Uttar Pradesh, Punjab, Haryana and Rajasthan as well as in the other metropolitan cities of Bombay, Madras and Calcutta that there is scope for such a tax in Delhi, although for administrative reasons it may be best to levy it as a fixed amount per annum in the form of an additional motor vehicle tax.

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