How is road tax calculated in India?

Road tax in India is calculated based on the vehicle's ex-showroom price, engine capacity, and state-specific rates. Most states charge road tax as a percentage of the vehicle value (typically 2-10%) or at fixed rates based on vehicle category. Some states offer concessions for electric vehicles and hybrid cars. Road tax is a one-time payment for private vehicles in most states.

Is road tax the same across all states in India?

No, road tax varies significantly across Indian states. Each state has its own road tax structure with different rates and calculation methods. For example, Karnataka charges 2% for cars while Maharashtra charges up to 8%. Some states like Delhi have lower road tax rates. Always check your state's specific road tax rates before purchasing a vehicle.

How to pay road tax online?

Road tax can be paid online through the Parivahan portal, state transport department websites, or VAHAN portal. Select 'Tax Payment' service, enter vehicle registration number, calculate applicable tax, make online payment, and download the receipt. For interstate purchases, road tax is paid at the time of registration in the new state.

What happens if road tax is not paid?

Failure to pay road tax can result in penalties, vehicle seizure, and fines during traffic checks. Road tax default may also affect vehicle insurance validity and renewal. Some states impose ongoing annual tax for commercial vehicles. Always carry proof of road tax payment while driving.

Can road tax be claimed back when selling a vehicle?

In most Indian states, road tax is non-refundable upon vehicle sale. The tax is considered paid for the remaining validity period but cannot be claimed back. Some states allow refund of unused road tax period when transferring registration to another state. Check with your state's transport department for refund policies.

Car Tax and Leased Vehicles UK 2026: Road Tax on PCP, PCH...

Leasing a vehicle — through PCP, personal contract hire, or business finance — raises specific questions about road tax. The legal keeper on the V5C determines who is responsible for taxing the vehicle, and in a lease agreement, this can be the finance company or the lessee depending on the arrangement.

VED on Personal Contract Purchase (PCP)

Under a PCP agreement, you are the registered keeper of the vehicle during the agreement period, even though the finance company may hold legal ownership. This means you are responsible for taxing the vehicle each year. Road tax is a separate cost from your monthly PCP payment — it is not included. You must tax the vehicle yourself using the V5C, which will be in your name as the keeper. At the end of the PCP, if you hand the car back, you return it without further tax liability.

VED on Personal Contract Hire (PCH)

PCH agreements are similar to long-term rental. Under PCH, the lease company is typically the registered keeper and responsible for taxing the vehicle. The monthly payment usually includes road tax — known as "road fund licence included" — so you do not need to separately arrange tax. However, you should confirm with your lease company what is included in the monthly payment. If the lease company fails to tax the vehicle, they are liable, but you will be unable to drive legally.

Business Lease Vehicles

Business lease vehicles may be registered in the company's name or the employee's name depending on the agreement. Company vehicles are typically taxed by the business. If the vehicle is registered to the company, the business pays VED as the keeper. Some business lease agreements pass the tax responsibility to the employee, particularly for salary sacrifice schemes. In these cases, employees are responsible for taxing the vehicle in their own name as keeper. Related: Car Tax and Leased Vehicles UK 2026 | Car Finance Uk | Car Tax and Vehicle Finance UK 2026 | Car Tax and Vehicle Finance UK 2026.

Company Car Tax and Lease Vehicles

If you lease a company car, the Benefit-in-Kind (BiK) tax rules apply. Your employer reports the company car as a taxable benefit on your P11D. The BiK value is based on the vehicle's P11D price and its CO2 emissions — lower-emission vehicles have lower BiK percentages and cost less in tax. Electric company cars with zero CO2 have a BiK rate of just 2% — making them significantly cheaper for employees than high-emission alternatives, even after lease costs are factored in.

What Happens at the End of a Lease

When you return a leased vehicle, the lease company handles the deregistration. You do not need to cancel road tax separately — the lease company will handle this when they take the vehicle back. If you are paying for road tax separately during the lease period, you should stop paying once the vehicle is returned. Any remaining full months of tax may be refundable — check with DVLA or your lease provider about the process for claiming a refund for unused tax periods.

Official Resources: GOV.UK Check Vehicle Tax | GOV.UK Vehicle Tax | DVLA Online | MOT Check

Frequently Asked Questions

Q: How much is car tax (VED) in the UK 2026?
Car tax rates in the UK depend on your vehicle's CO2 emissions and list price. Standard rates start from £190 per year for petrol and diesel cars, with zero-rated VED for EVs. First-year rates vary from £0 to £2,605 depending on emissions. Additional premiums apply for vehicles over £40,000.

Q: How do I check if my car is taxed online?
You can check your vehicle's tax status for free on the Gov.uk website at gov.uk/check-vehicle-tax. You'll need your vehicle's registration number (number plate). You can also check via the Motor Insurance Database to verify road tax and insurance status simultaneously.

Q: Can I get a refund on car tax if I sell my vehicle?
Yes — if you sell or scrap your vehicle, you can claim a refund on any full months of remaining road tax. Contact DVLA with the V11 reminder letter or apply online at gov.uk. Refunds are usually processed within 4-6 weeks.

Q: Is road tax refund available when transferring ownership?
No — road tax does not transfer with the vehicle. When you sell your car, the tax is automatically cancelled and any remaining months are refunded to you by DVLA. The new owner must tax the vehicle immediately. As a buyer, always verify the vehicle's tax status before purchasing.

Q: What is the luxury car tax threshold in the UK 2026?
The additional rate for vehicles over £40,000 (list price) adds £410 per year to standard VED rates for years 2-6 of registration. This surcharge brings the annual cost for high-emission vehicles over £40,000 to around £600-690 per year. Pure EVs under £40,000 pay zero VED.

Car Tax and Leased Vehicles UK 2026: Road Tax on PCP, PCH and Finance