For a large number of people and families in India, buying a car is one of the major milestones. The purchase of the dream vehicle, be it a sedan, hatchback, or an SUV – which is getting increasingly popular in India, with all its joyous and thrilling aspects, still demands a proper understanding of the factors that influence the ultimate price beyond the showroom price. The price of a new car in India fluctuates a lot from state to state due to the differences in road tax, fees, registration charges, and other local levies.
This article examines the regional differences and their effect on the final price of cars, thus facilitating the buyer to understand the complicated state-wise car price and making an informed decision.
What are the Components of a New Car Price in India?
Usually, when you ask about the price of a car in a dealership, you see the ex-showroom price. In fact, this price is made up of the factory cost of the car, GST (Goods and Services Tax), and the dealer margin. The cost quoted by the dealership, however, does not cover the mandatory additional ones coming from the dealer side such as road tax, registration fees, and insurance, among other expenses.
The price you see on the road is different; however, it is the actual amount you pay when buying a new car, and this price includes the extra costs mentioned previously. The following whoopee one influences the on-road price of a new car in India:
1. Ex-Showroom Price: The basic price set up by car manufacturers for a certain model.
2. Road Tax: A tax on every state to use public roads, which varies very much from one region of India to another.
3. Registration Fees: Fees charged for registering the vehicle at the Regional Transport Office (RTO).
4. Insurance Premium: Mandatory motor insurance coverage for the car.
5. Handling/Logistics Charges: Administrative fees charged by the dealership for registration and paperwork handling.
6. Other Fees: Comprising extended warranties, accessories, and legal documentation costs that are optional.
The major contributor to the variability in new car price from one state to another is the road tax, which ultimately decides the price of your car.
The Road Tax and the Price Differentiation among States
The road tax in India serves as a source for improving and maintaining the public transport infrastructure. Nonetheless, it is not a single tax across the country; rather, it differs from state to state very much. Road tax rates are based on various factors including the engine size of the vehicle, fuel type, and the purpose of use (private or commercial).
For instance, in India, SUVs with large engines and high price tags tend to be subjected to higher road tax rates compared to smaller hatchbacks. When it comes to the tax applied to vehicles, states with lower taxes will always win in terms of the buyer’s new car cost, whereas tax-heavy states will have a significantly higher on-road price.
The following trends can be seen in different Indian states:
1. Southern States with High Road Taxes: The southern states like Karnataka, Kerala, and Tamil Nadu impose relatively higher road taxes. For instance, Karnataka charges up to 20% tax on vehicles over ₹10 lakh, which can add a significant amount to the prices of high-end SUV cars in India.
2. Northeastern and Union Territories with Low Taxation: Arunachal Pradesh, Mizoram, and Chandigarh are among the regions where road tax rates are low, and this makes it a little easier for people to own a car in these areas.
3. The NCR Region Road Tax in Delhi: In Delhi, road tax is computed at a value that is between 4% and 12% depending on the vehicle’s cost and engine size. This could be a plus for Delhi SUV purchase as compared to nearby Haryana or Rajasthan.
Let’s break down the state-wise road tax rates.
For the convenience of new car buyers, we present the approximate road tax rates in the above-mentioned states in India:
| State/UT | Road Tax Rate |
|-|-|
| Karnataka | Up to 20% for vehicles priced above ₹10 lakh |
| Maharashtra | 9-11% according to engine capacity |
| Tamil Nadu | Up to 10% for private vehicles |
| Telangana | 9-12% depending on the vehicle value |
| Punjab | 6-8% |
| Delhi | 4-12% depending on cost and engine capacity |
| Mizoram | About 2-4% |
Road tax is just one aspect the buyer has to consider; in addition to it, registration charges, green tax (for vehicles over 15 years old in some states), and cess also influence the overall price.
Effect of Extra Local Fees on SUV Car Prices
SUVs are the most sold and the most trusted car segment in India, this is all due to their versatility, tough look, and the fact that there is almost every type of SUV in the market now. From Tata Nexon, which is a compact SUV, through the Hyundai Creta which is in the mid-range, up to the Mahindra XUV700 which is a luxury SUV, the one thing that ties SUV taxation together is that it is usually higher than that of smaller vehicles due to the latter category being less than SUVs in terms of price and engine size.
Moreover, luxury vehicle tax on top of SUVs costing more than ₹40 lakh and diesel cess in some states might be other costs to the buyers that are not directly related to the vehicle upkeep but that contribute to the total cost of ownership rather.
How to Buy a New Car at a Lower Cost?
1. Study State Tax Policies: If you can buy or register your car in another state that has lower road taxes, you will save a considerable amount of money. Nevertheless, it is mandatory to complete the vehicle re-registration process if you change your state of residence.
2. Choose Fuel Type Wisely: A lot of states promote such cars like electric vehicles, which are eco-friendly. By picking EVs, the buyers can save a lot on their costs compared to the diesel or petrol versions.
3. Insurance Comparisons: Choose a low insurance premium from well-known providers. The comparison of quotes can do a lot in bringing down this part of the on-road price.
4. Negotiate in the Showroom: Whether it’s a case of buying SUV cars in India or a smaller sedan, try to negotiate the extra handling fees and accessories with the dealers.
Conclusion
The variation of road tax and fees across states is one of the most important factors to consider in the making of a new car purchase in India. The car price is not only depended on the manufacturer’s price; other costs like state taxes, registration fees, and so on can substantially change the final on-road price. For SUV cars in India, the influence of these charges might be even more pronounced.
A little research into the state-by-state tax rates, fees, and local ordinances can result in a significant difference in price, allowing you to ride home in the car you have chosen without going over budget. So, if your choice is a budget-friendly hatchback or a luxury SUV, these regional factors can give you tremendous insight and assurance during your car buying process.