Mumbai luxury car tax evasion: Mumbai RTOs have issued show-cause notices to 19 car dealers over alleged fake rental agreements used to register luxury vehicles in Diu and Daman and avoid Maharashtra's higher motor vehicle tax. On a hypothetical Rs 2 crore petrol car, the tax difference could be Rs 14 lakh. The crackdown raises a practical question for customers who bought vehicles through these dealerships: could they face tax demands or registration problems?
Consider a luxury petrol SUV priced at Rs 2 crore. Maharashtra's one-time motor vehicle tax for private petrol cars is capped at Rs 20 lakh, while the rate cited by RTO officials for petrol cars costing more than Rs 10 lakh in Dadra and Nagar Haveli and Daman and Diu is 3%.
On that illustrative calculation, the tax in Diu and Daman would be Rs 6 lakh, compared with Rs 20 lakh in Maharashtra, creating a potential difference of Rs 14 lakh. The calculation explains the financial incentive behind the alleged registration arrangement; it is not the confirmed amount evaded on any particular vehicle. Maharashtra's official tax schedule sets out the state's rates and maximum tax.
How the alleged registration racket worked
Mumbai RTOs have issued show-cause notices to 19 car dealers over their alleged involvement in registering luxury vehicles outside Maharashtra to avoid the state's higher motor vehicle taxes, according to TOI.
According to RTO officials, some dealerships initially registered newly purchased vehicles temporarily in Mumbai before transferring their permanent registration to Diu and Daman, where vehicle taxes are lower.
Investigators found that some dealers allegedly used fabricated Leave and Licence agreements to make it appear that buyers lived or operated businesses in the Union Territory. The documents were submitted to support out-of-state registration, even though the vehicles were delivered to and driven in Maharashtra.
In several instances, multiple luxury cars belonging to unrelated buyers were reportedly registered at the same rental address. Buyers' Aadhaar cards, meanwhile, showed permanent addresses in Maharashtra, according to the report.
The crackdown was directed by transport commissioner Rajesh Narvekar. He said showrooms had misled buyers about their tax liabilities under the Maharashtra Motor Vehicles Tax Act, 1958, and warned that dealers could lose their licences if their responses to the notices were unsatisfactory.
RTOs flag 287 luxury vehicles across Mumbai
The investigation has identified luxury vehicles across three parts of Mumbai. Officials reported 68 high-end vehicles in South Mumbai, 104 in the eastern suburbs between Kurla and Mulund/Mankhurd, and 115 in the western suburbs between Bandra and Dahisar.
The figures add up to 287 vehicles flagged during the enforcement drive.
The 19 dealers have been given seven days to explain why their trade licences should not be suspended or cancelled. A show-cause notice gives the recipient an opportunity to respond before an authority decides on further action. It does not mean the licence has already been revoked.
What happens to customers who bought cars from these dealers?
The crackdown also raises questions for people who bought luxury vehicles through the dealerships under investigation. If a car was registered in Diu and Daman even though it was primarily used in Maharashtra, the owner could face questions about the vehicle's tax and registration status.
RTO officials have said the wider enforcement drive is intended to recover applicable Maharashtra motor vehicle taxes, including the tax difference wherever it is due. In an earlier phase of the drive, authorities issued challans and tax assessment notices to owners of vehicles registered outside the state.
Owners of cars registered outside Maharashtra but primarily used in Mumbai should keep their purchase invoice, registration certificate, insurance, address documents and any registration paperwork provided by the dealer readily available. They should respond to any official RTO notice and seek clarification from the transport authority if asked to regularise the vehicle's tax or registration.
The outcome will depend on the facts of each case and the transport department's assessment. The immediate action is against 19 dealers, while the wider question for customers is whether their cars were registered correctly and whether any additional tax is legally payable.
