Why should luxury cars owned by social institutes get tax benefits, CAG ask

Vehicles purchased by 2 trusts were given road tax exemption causing loss to state exchequer

The Comptroller and Auditor General (CAG) in its report has pointed out that high-end luxury cars owned by institutions working in the social sector enjoyed the benefit of road tax exemption in the absence of clear cut guidelines in this regard.

While the Motor Vehicle Tax Rules provided for exemption from payment of tax for some charitable, cultural, welfare or philanthropic institutions. The government has not issued any notification listing eligible institutions for allowing such exemption under the Rules.

"The exemption granted by transport department to the trusts/societies which could afford to purchase luxury vehicles and pay for choice registration numbers, defeated the intention of the Rules," the CAG noted in its report.
 

The CAG report ending March 2016 was tabled on the floor of the House this week.

It has pointed out that luxury vehicles purchased by two trusts or societies were given road tax exemption causing loss to the state exchequer.

"We observed that Director of Transport in exercise of powers conferred by Rule 22 of Motor Vehicle Rules issued notification to two institutions.

"The total road tax exempted to these institutions for purchase of new luxury motor cars was Rs 9.87 lakh," the audit report has mentioned.

Both the Goa-based institutions -- Dominic and Joan Ministries and Padmanabh Shishya Sampradaya Trust -- had purchased different variant of Mercedez Benz car each, the CAG has pointed out referring to the data available from the Transport Department.

"Under Rule 22 (1) the motor vehicles owned by such institutions as notified by the Government are exempted from the payment of road tax. The government however has not issued any notification under the Rule listing eligible charitable institutions for allowing such exemption under the Rules.

"It has also not specified categories of vehicles exempted for such institutions," the report mentions.

CAG has pointed out that in absence of such notification, the director of transport has been issuing notifications on case-to-case basis by granting exemptions to various charitable institutions.

Referring to both the societies which enjoyed this benefit for their luxury cars, the report noted that "the institutions paid Rs 30,000 and Rs 10,000 respectively for getting a choice registration number for their vehicle.