Uttar Pradesh Shifts to One-Time Tax System for Commercial Vehicles
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To compensate for the potential revenue loss due to road tax exemption on electric vehicles. The Uttar Pradesh state cabinet has approved the draft of the Uttar Pradesh Motor Vehicles Taxation (Amendment) Bill, 2025. This move introduces a significant change in the state’s transport tax regime. And will implement a one-time tax system for various categories of commercial vehicles.
Key Highlights of the Amendment:
- Vehicles Covered: Two-wheelers, three-wheelers, four-wheelers cabs, and maxi cabs will be subject to this tax system. Goods vehicles up to 7,500 kg, construction equipment and specially designed vehicles will also fall under the one-time tax system.
- Current Tax Structure: The existing tax system will be replaced by a one-time tax for commercial vehicles operating for hire.
- Objective: The amendment aims to enhance revenue, simplify the tax structure, and support long-term revenue sustainability.
- Impact: The new tax system will stabilise and increase state income, aligning with Uttar Pradesh’s goal of becoming a $1 trillion economy.
Exemptions:
- Tractors will not be covered under this new tax system and will continue to follow the quarterly and annual road tax payment structure.
By implementing this new tax regime, the state government aims to promote a more streamlined and efficient taxation system. While also encouraging the growth of electric vehicles in the state under the UP Electric Vehicle Manufacturing and Mobility Policy, 2022.
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