According to insider sources, field formations argue that fancy number plates are a luxury and should be taxed accordingly.
The debate over whether fancy vehicle number plates should attract Goods and Services Tax (GST) has intensified, with tax authorities seeking clarity from the Finance Ministry on the matter. Field formations, the state and zonal offices responsible for tax collection and enforcement, have requested guidance from the Central Board of Indirect Taxes and Customs (CBIC) on whether these high-value registration numbers should be classified as a luxury item and thus subject to a higher GST rate.
According to insider sources, field formations argue that fancy number plates are a luxury and should be taxed accordingly. Recently, the Central GST Authorities from the Delhi North Zone issued a show-cause notice to the Delhi Government’s Transport Authority, demanding GST dues on the auction of these fancy number plates.
Field formations have reported to the Finance Ministry that while some state transport authorities have been collecting 18% GST on the auction prices of these fancy numbers, they have not been consistently remitting the tax. These auctions often see bids in the lakhs, especially for coveted numbers like 0007 or 0001, which have fetched upwards of ₹20-30 lakhs. Given the high premium on these numbers, the formations believe the GST rate should be increased to 28%.
Currently, many states maintain that the issuance of number plates is exempt from GST. However, the question of whether these premium plates should be considered a luxury and taxed at a higher rate remains unresolved.
As the Finance Ministry deliberates on this issue, the response from state transport authorities and bidders for these fancy number plates will be critical. The outcome could lead to significant changes in how these auctions are conducted and how much bidders will need to pay in taxes.
This ongoing situation raises important questions about tax policy and luxury classification, and it will be interesting to see how it unfolds in the coming weeks.
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