Sikkim Assembly introduces Motor Vehicles Taxation (Amendment) Bill, 2025

The Sikkim Legislative Assembly on Monday introduced the Sikkim Motor Vehicles Taxation (Amendment) Bill, 2025, aimed at revising the taxation structure on vehicle registration in the state. The bill, which seeks to amend the Sikkim Motor Vehicles Taxation Act, 1982, proposes an increase in additional tax rates applicable to different categories of vehicles.

Under the amendments, the State Government will have the authority to increase the rate of additional tax through official notifications. The revised Schedule II outlines tax slabs based on the invoice cost of vehicles. Private, government, and public sector vehicles will now be subject to a graded tax structure ranging from 1% for vehicles costing up to ₹2 lakh to 6% for those above ₹50 lakh. Similarly, commercial vehicles, including taxis and goods carriers, will face taxes between 1% and 3%.

Additionally, the bill introduces new tax rates for vehicle transfers and re-registrations. Sikkim-registered vehicles undergoing ownership transfer or number plate change will be taxed based on engine capacity, with fees ranging from ₹1,000 for motorcycles up to 80cc to ₹25,000 for cars above 2,000cc. Vehicles registered in other states but brought to Sikkim for registration will be taxed at 50% of these rates.

A key provision in the bill seeks to deter vehicle purchases from outside Sikkim, despite the presence of authorized dealers in the state. Vehicles bought from out-of-state dealers will face an additional 50% tax over the standard rates. However, electric, hybrid, and battery-operated commercial vehicles will be exempted from additional tax, while private non-transport electric vehicles will be taxed at 1% of the invoice cost.

The government has justified these amendments as a measure to boost state revenue and promote local vehicle dealerships. If passed, the revised taxation structure will come into effect upon its notification in the Official Gazette.