Sikkim introduces new Motor Vehicle Taxation rules

The Sikkim Legislative Assembly has passed the Sikkim Motor Vehicles Taxation (Amendment) Bill, 2025, bringing significant changes to the taxation system for vehicle registration in the state. The new bill, which amends the Sikkim Motor Vehicles Taxation Act, 1982, aims to revise the additional tax structure for vehicle registration and transfer of ownership.

Under the new amendment, the state government has the power to increase the rate of additional tax on vehicle registration through notifications in the Official Gazette. The new taxation structure, categorized under Schedule II of the Act, introduces revised tax rates based on the invoice cost of vehicles.

For private vehicles, the additional tax is as follows:

• Vehicles costing up to Rs. 2 lakh: 1%

• Vehicles costing between Rs. 2 lakh to 4 lakh: 2%

• Vehicles costing between Rs. 4 lakh to 10 lakh: 3%

• Vehicles costing between Rs. 10 lakh to 25 lakh: 4%

• Vehicles costing between Rs. 25 lakh to 50 lakh: 5%

• Vehicles costing above Rs. 50 lakh: 6%

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For commercial vehicles, including taxis and goods carriers:

• Vehicles below Rs. 10 lakh: 1%

• Vehicles above Rs. 10 lakh: 2%

• Stage carriages (buses): 2%

• Buses owned by private organizations and educational institutions: 3%

• Private service vehicles (omnibuses registered as non-transport): 3%

• Tractors, trailers, cranes, and other equipment: 3%

• Ambulances, fire tenders, and public utility vehicles: 2%

The amendment also revises taxes for vehicles undergoing ownership transfer or those being registered in Sikkim from other states. Motorcycles and motorcars are subject to additional tax based on engine capacity:

• Motorcycles up to 80cc: Rs. 1,000

• 81cc to 170cc: Rs. 1,500

• 171cc to 250cc: Rs. 2,000

• 251cc to 350cc: Rs. 2,500

• 351cc to 500cc: Rs. 4,500

• Above 500cc: Rs. 7,500

For motor cars:

• Up to 900cc: Rs. 10,000

• 901cc to 1490cc: Rs. 15,000

• 1491cc to 2000cc: Rs. 20,000

• Above 2001cc: Rs. 25,000

Additionally, vehicles registered in other states and brought into Sikkim for re-registration will be taxed at 50% of the rates mentioned above.

The government has stated that the revised taxation policy is aimed at enhancing revenue generation for infrastructure development and improving road conditions in Sikkim. Authorities believe that the new tax structure will also regulate the inflow of vehicles into the state and ensure sustainable road usage.