Highway financing in India

The Central Government, State Governments, and local organisations like Corporations, Municipalities, District Boards, and panchayaths are all responsible for funding various roadways.

The Central Government imposes the following taxes to fund highways:

  • Motor fuel duties and tariffs
  • Excise taxes on automobiles, auto components, tyres, etc.
  • Excise taxes on grease, oils, etc.

The State Governments levy the following taxes:

  • Vehicle registration fees and road tax
  • Transport vehicle permits
  • Fees for driving permits
  • Sales Tax on Car Parts, Tyres, etc.;
  • Passenger Tax on Buses;
  • Sales Tax on Car Parts;
  • Taxes Levied by Local Bodies, Mainly Toll Tax

Since the Central Road Fund (CRF) was established in 1929 through the taxation of motor fuel, this has been the State Government’s primary source of funding for road development without having to again go through the laborious procedure of specific punishments.

However, in recent years, the CRF and general revenue have been combined. In March 1976, the Lok Sabha has approved the Ministry of Transport’s decision confirming the CRF’s existence separately with the predetermined goals. The levy on customs and excise on motor spirit would be set aside in an amount of at least 3.5 pence per litre for the CRF for the construction of roads. When using this fund, initiatives with national significance in India would receive more focus. The federal government would keep 20% of the fund for future use. Additionally, the capital will be used for traffic studies, economic surveys, and plans for young engineers’ training. Approximately Rs. 12,000 Cores in gross revenue came from road transport in India during the sixth plan years of 1978–83 and 1980–85.

Shubhajna Rai
Shubhajna Rai

A Civil Engineering Graduate interested to share valuable information with the aspirants.

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