Life Tax.

The Government have introduced life time tax w.e.f.1.7.98 by Act.No.27/98

The same life time tax system has been modified by Act.No.13/2008.With this new act life time tax has to be paid at 6% of the cost of the vehicle w.e.f.1.8.2003.

Again by Act No.30/2008 life time tax has been increased to 8% of the cost of the vehicle w.e.f. 1.6.2008.

Now a question arises as to how to collect tax for a transport vehicle like tourist taxi if it is converted as a car?

The first thing we have to do is just look at the date of registration. If the date of registration is prior to 1.7.98, there is an option open for the owner of the vehicle either to pay annual tax or pay life time tax as he chooses.

If the date of registration is after 1.7.98, then the owner has to pay life time compulsorily. There is no option to pay annual tax.

See circular No.21/2004 and also Government letter no. 353 Home Tr.I dated 20.2.2004.

One important thing that should come to our mind is that we have to collect the life tax taking the value of the cost of the vehicle. Under no circumstances we should deduct the tax paid or period lapsed etc. The tax should be calculated based on the two important things. Cost of the vehicle plus the percentage of tax applicable as on date.