Know about Impact Of Taxes On Road Transport in India
The Indian tourism sector has been witnessing an encouraging growth both in terms of foreign tourist arrival and domestic tourist visit. Despite this encouraging growth, India’s share of international Tourist Arrivals is 0.6% of the global market. One of the primary reasons for this dismal situation has been the high rates and multiplicity of taxes, that has led to the tourist packages being out priced in comparison with those available in competing destinations.
Why are road taxes collected?
The purpose of these taxes is to ensure that the costs of transportation infrastructure and services are shared by those who use them. They also help to fund improvements and upgrades to transportation systems, which can benefit both passengers and drivers.
Impact of taxes on international and domestic tourists
International and domestic tourists move around the destinations in tourist coaches and cars. Many of the popular destinations require inter-state movements. To illustrate, the golden triangle circuit of Agra-Delhi-Jaipur covers 4 states of Delhi, Haryana, Uttar Pradesh and Rajasthan. While moving across these 4 states, the vehicles have to pay a considerable amount of road and passenger taxes.
The tax structure varies from state to state. The taxes can be levied per seat basis or per k.m. basis. They could be calculated per day, weekly, monthly or quarterly basis. Due to the absence of centralized tax payment facilities, the tourist vehicle has to stop at each entry/state border to pay taxes. This causes undue delay in itinerary, resulting in dissatisfaction of the tourists. In India tax paid contributes to a substantial amount of the package cost which may impact international tourists’ decision to visit India as a destination.
Passenger taxes are taxes that are imposed on passengers who use transportation services such as airlines, buses, and trains. These taxes are usually included in the ticket price and are used to fund airport and transportation infrastructure.
Recommended Solution
- Rationalization of tax structure to have simplified/uniform formula, implemented across the states/UTs
- To ensure that tourist permit is provided after payment of advance tax and vehicles can move unhindered across the states
- A system of seamless movement of tourist vehicles through inter-state borders be implemented. Though implementation of FASTag has been a very good development for ensuring seamless movement.
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