Buying a vehicle in Jammu and Kashmir has become costlier than in most parts of India, and the reason is not rising fuel prices or transportation costs—it is unlawful taxation. The J&K Government continues to charge Road Tax on the GST component of vehicle invoices, even though the Union Ministry of Road Transport and Highways (MoRTH) explicitly banned this practice in August 2021.

Despite repeated reminders and official communication from the Transport Department, the Finance Department has failed to act, leaving thousands of buyers vulnerable to what industry experts call “taxing a tax”.

What the MoRTH Notification Says

The MoRTH order, dated August 26, 2021, clearly states that Road Tax on fully built non-transport vehicles must be calculated only on the invoice price, excluding GST. The directive was meant to standardize taxation across India and protect consumers from overcharging, according to a Daily Excelsior report.

Most states and Union Territories—including Punjab, Gujarat, Sikkim, Puducherry, Arunachal Pradesh, and Mizoram—have already implemented this rule. But Jammu & Kashmir continues to ignore it, creating an arbitrary and unlawful dual system of taxation.

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Double Standards in Road Taxation

Under the current system, there are two separate rules in J&K:

• For Bharat Series (BS) vehicles, Road Tax is levied on the invoice price only.
• For locally registered vehicles, Road Tax is calculated on the aggregate invoice value (basic cost + GST).

This double standard not only contradicts Union Government orders but also places an unfair burden on local buyers.

The Root of the Problem: A 2019 Finance Order

The malpractice stems from a Finance Department order issued on November 18, 2019, which instructed that Road Tax be charged on the total cost including GST. Using this as justification, the Transport Department continues to impose 9%–10% Road Tax on aggregate invoice values, effectively forcing citizens to pay tax on GST.

Industry experts argue that this practice amounts to blatant exploitation and deliberate overcharging, which has cost vehicle buyers lakhs of rupees over the years.

Industry and Public Outcry

The Federation of Automobile Dealers Association (FADA), through a letter dated January 14, 2025, urged the J&K Finance Department to reconsider the practice. They highlighted that:

• J&K already faces higher vehicle costs, high fuel prices, and challenging terrain.
• Citizens, especially in remote and border areas, rely heavily on vehicles for essential services.
• Adding Road Tax on GST increases financial burden unnecessarily.

The FADA warned that continuing this policy is hurting consumers and inflating transportation costs, which ultimately raises the price of goods and services in the region.

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Silence from Finance Department

According to Daily Excelsior, the J&K Govt. Transport Department flagged the issue in January 2025, seeking urgent clarification. However, the Finance Department has remained silent, which many see as a deliberate attempt to continue benefiting from unlawful taxation.

Experts and citizens call this inaction a betrayal of public trust, arguing that the Finance Department’s refusal to even respond indicates complicity.

Why This Matters for the Common Citizen

• Higher vehicle prices due to illegal taxation.
• Increased operational and transport costs that trickle down to every household.
• Unfair treatment compared to other states where MoRTH’s directive is being followed.
• Erosion of trust in government institutions.

Every day the Finance Department delays action, thousands of vehicle buyers lose money, while the practice continues unchecked.

Urgent Need for Intervention

Both automobile experts and citizens are demanding immediate government intervention to scrap the unlawful order of November 2019 and align with the MoRTH notification. Until then, vehicle owners in J&K will continue paying tax on tax, a burden no other Indian citizen faces today.