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What is Toll Tax & Why Is It Collected?

Toll Tax

Have you wondered what is toll tax and the reasons why they are collected? Toll Tax, also known as Toll Charge, is an amount supervised and collected by the National Highway Authority of India (NHAI). The driver is supposed to collect this amount whilst crossing any national/international highway, tunnel, road, or bridge. These roads that levy charges are termed Toll Roads. At a range of 60 kilometers (about 37.28 mi) or less, you would come across Toll Booths that handle collecting the respective amount from you. 

Let us look at some of the features of Toll Taxes:

  • Since toll tax is a form of indirect tax, there are exceptions who are not required to pay them. Here is the detailed list
  • Its responsibility is to aid the government in maintaining the nation’s and states’ highways and roads
  • Toll Taxes are applied on 4-wheelers and other heavy vehicles. Each time a payment is made, a receipt is delivered. 2-wheelers are spared from paying these taxes.
  • With time, the toll tax gets cheaper. Initial costs of a newly constructed road or highway are covered via taxes. But thereafter, it is only applied to the maintenance fee at a lower rate of 40%

Now that you have understood what is toll tax, let us dive into the intricacies of it!

Why Is Toll Tax Collected?

It may surprise you to know how many types of tax are paid by us for using our vehicles on Indian roadways. As a result, it is important to understand all these various taxes, their goals and how they differ. A road tax is a fee that must be paid or is typically included with the use of a wheeled vehicle on a public road. It goes by several names around the world. Except for the national highways, which are constructed and supported by the central government, their individual state governments build more than 80% of the roads in all of India. 

The road fee is effectively imposed by the individual state government because the costs of building these state-constructed highways are borne independently by each state. Since this tax is imposed at the state level, different state governments do so at various levels. The laws governing how much road toll tax can be charged vary from state to state. As a result, since different states impose different percentages, the amount of road tax also varies.

Importance Of Toll Tax in India

The importance of Toll Tax in India is no exception to any other country around the globe. However, there are a few added points to be aware of when discussing how toll tax in India truly functions, in addition to merely comprehending the question- what is toll tax? 

In India, road taxes are charged on all sorts of vehicles. However, several variables would affect how much tax is due. The vehicle’s engine size, weight, seating ability, fuel consumption, age, state of registration, the vehicle’s use and class, date of registration and finally, the date of purchase are some of the aspects. Here, the road tax is computed as a part of the vehicle’s price. The road tax is figured out by the state in which a person registers their vehicle; however, this proportion differs in India from state-to-state.

As a result, road tax is paid upon registering a vehicle with the RTO, usually at the time of purchase. To continue using the vehicle in the new state, one would need to pay the road tax again if they moved to a different one. Typically, road tax is paid only once, at the time of vehicle registration. One can, however, in some circumstances, pay for it annually.



FASTag For Toll Tax Collection

The Government of India has mandated FASTag for all four-wheeled vehicles beginning on February 15, 2021. FASTag is a tag that uses RFID (Radio Frequency Identification) technology to help digital toll collection on all state and federal roadways in the nation. All four-wheeled vehicle owners must attach the FASTag to the windshields of their vehicles to facilitate cashless payments, the digitization of all types of transactions and time and fuel savings. 23 national banks oversee running and providing FASTags along with NPCI (National Payments Corporation of India).

The FASTag service automates toll deduction from customers’ bank accounts or pre-paid wallets, eliminating manual tax collection at toll plazas and speeding up the procedure. Additionally, it saves time for the drivers of the vehicles because they do not have to stop at each toll booth along the state and national highways.

The Bottom Line

The toll tax is a significant source of recurring income that will be used to update the roads to meet modern safety standards. Using FASTag has made paying for tolls even simpler because you may go cashless and skip the enormous lines at the toll plaza.

Continue Reading on The India Saga.



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