U.P. cabinet nod to proposed one-time tax system for commercial vehicles

The proposed amendment, aimed at enhancing revenue and simplifying the tax structure, seeks changes in Sections 4 and 9 of the Uttar Pradesh Motor Vehicles Taxation Act, 1997.

In order to offset potential revenue losses caused by road tax exemptions on electric vehicles, the state cabinet has approved the draft of the Uttar Pradesh Motor Vehicles Taxation (Amendment) Bill, 2025, introducing a major shift in the state’s transport tax regime by moving to a one-time tax system for several categories of commercial vehicles.

For representation only

The proposed amendment, aimed at enhancing revenue and simplifying the tax structure, seeks changes in Sections 4 and 9 of the Uttar Pradesh Motor Vehicles Taxation Act, 1997. Once passed by the state legislature, it will replace the existing monthly, quarterly, and annual tax system with a one-time tax on transport vehicles operating for hire or reward (commercial vehicles)—such as two-, three- and four-wheeler motor cabs, maxi cabs, goods vehicles up to 7,500 kg, construction equipment vehicles, and specially designed vehicles.

Officials said that while EVs were being promoted under the UP Electric Vehicle Manufacturing and Mobility Policy, 2022, the resultant tax reliefs had negatively impacted transport department revenues.

“The shift to a one-time tax system is intended to stabilise and increase state income, especially as Uttar Pradesh pursues its target of becoming a $1 trillion economy,” a government spokesman said. The amendment is expected to rationalise taxation and support long-term revenue sustainability.