In a major policy shift, the Uttar Pradesh government has approved a one-time tax system for certain categories of commercial vehicles, replacing the existing monthly, quarterly, and annual payment model. The move comes under the Uttar Pradesh Motor Vehicles Taxation (Amendment) Act, 2025, which recently received the cabinet's nod.
As per the new system, two-wheelers, three-wheeler motor cabs, four-wheeler taxis, maxi cabs, construction vehicles, specially manufactured commercial vehicles, and goods carriers with a load capacity of up to 7,500 kg will now have to pay a single, lump sum tax for operation. Until now, these vehicles were taxed periodically under the Uttar Pradesh Motor Vehicles Taxation Act, 1997.
The Transport Department has also announced a 2.5 per cent increase in the lump sum tax, the details of which will be notified separately.
Finance Minister Suresh Khanna, following the cabinet meeting, said that the decision aims to simplify the tax structure and curb evasion. “No changes had been made to the tax structure for several years. This step will make the taxation system more practical and boost revenue,” he stated.
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The shift also comes in response to reduced tax collections from conventional vehicles following road tax exemptions for electric vehicles under the State Electric Vehicle Manufacturing and Mobility Policy, 2022.
Key beneficiaries of the one-time tax system will include Rapido, Zomato, Swiggy, two-wheelers, autos, tempos, JCBs, Matadors, and similar commercial vehicles. However, roadways, buses, heavy trucks, driver training vehicles, and tractors will continue to follow the quarterly or annual tax structure.
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Officials believe the new system will bring greater transparency, ensure compliance, and significantly increase the state’s revenue from motor vehicle taxation.