The chief minister announced in the state budget on Friday that the an additional fare of Rs 500 per seat will be levied on luxury cabs operating in the city. Cars costing Rs15 lakh and above fall under the category of lluxury cabs.
“This is very unusual. I do not think any other state levies tax on per seat basis. I would expect the government to reconsider their decision,” says Rajiv K Vij, managing director and CEO, Carzonrent.
Cab companies argued that the move has come as a setback to their attempts to make commute in the city hassle free. “I do not understand the logic behind such a move. Why would they want to do this,” a member of a cab service said, requesting anonymity.
However, CEO and co-founder of Olacabs, Bhavish Aggarwal, feels the decision will have little impact on customers. “The tax has been levied on luxury cabs, hence the target customers are very different. For them, what matters at the end of the day is a smooth ride,” he said. Aggarwal feels there will not be any transfer of this extra cost to customers.
Gaurav Aggarwal, CEO of Savaari Car rentals, said his company will not be impacted much as majority of his business comes from the mid-segment cars.
The state government, in its budget, also announced that it wants to bring suitable amendment to the Motor Vehicles Taxation Act. While announcing the budget, chief minister Siddaramaiah said: “It has been found that vehicles being registered in other states having lower rate of life time tax ply in the state.”
This move has been welcomed by the organised players in the industry. “It is a good move as it will bring a check on those violating the law. “The unorganised players are the ones who do such illegal activities. Hence, the decision of the government is welcome,” said Vij.