Why vehicle re-registration in other state is an absurd law!

Indian motor vehicle law registers vehicles in a state wise manner. The number plates begin with first two letters that indicate in which state the vehicle is registered (TN for Tamil Nadu, KA for Karnataka etc.) The law assumes vehicle owner permanently stays inside whatever state in which he/she registers his/her vehicle. The law requires a complicated procedure that vehicle should be re-registered again if it has to be used in different state than where it is registered. This law is too outdated, irrelevant and makes life unnecessarily complicated for vehicle owner. This post explains nuisances of this law and its redtape and irrelevance.

What does the motor vehicle law say?

Can a white board vehicle be driven to other states? Yes.

Motor Vehicle Act clearly permits a whiteboard vehicle to travel across the country without any extra fee or restrictions. Commercial vehicles have different rule [Explained here]. If you own a white board car you car drive it anywhere within India. This part is clear, but what is not clear is the duration for which this 'out of state' stay is allowed.

How long can a vehicle be used in another state?

This is the tricky part. A 63 year old law- Karnataka Motor Vehicle Act 1957 states vehicles should be re-registered in Karnataka within 30 days of entering the state. Other states may have their own rules. Left to traffic police, they will promptly reduce this duration to 7 days or 15 days trying to extract fine from other state vehicle owners.

Update: I am told Karnataka allows outstation vehicle to be used for about 12 months.

What is the logic behind this vehicle re-registration law?

Why can't I just use by bike or car anywhere in India? Why re-register? There're following reasons

1. Loss of tax money: States think vehicles that paid tax in other states but being driven in their state is loss of tax money and they are entitled to demand fresh tax. This logic is totally flawed because of following reasons

#A: For every 1000 other state vehicles entering Karnataka, there could be 1000 Karnataka vehicles moving to other states- If Karnataka vehicles are being taken to Kerala, TN or MH, Karnataka is getting free tax money anyway. So overall the loss and gain gets balanced.

#B: When a vehicle is used in any state, state govt gets lots of tax money. When a TN vehicle buys fuel in Karnataka, Karnataka gets VAT on fuel, when the vehicle passes toll, buys any spare part etc local state govt gets its share of GST irrespective of where the vehicle was registered.

2. Tax evasion: Some states have very high tax on vehicle registration, while other states (like Pondy) have low tax. Because of this several luxury car users register in Pondy and use in TN/KA/KL etc. For a low value bike/car buyer the tax difference is not worth the effort involved in registering it in another state so they register in their own state. Only expensive vehicles have this issue- for this state governments should either have similar tax amount or for expensive vehicles they can do extra check if owner is resident of the state where it is being registered. [Read some related news on Hindu]

3. Law and order: Local police find it difficult to trace a owner or collect fine from vehicle registered in another state. But this was 50 years ago- now law enforcement agency should be able to exchange info among themselves and sort it out (like KA police tell TN that these 50 TN vehicles have violated rules in KA, collect fine n give to us and TN police do the same with KA)- but our lazy Govt departments don't want to put in any effort.

What is the procedure to re-register a vehicle in another state?

The process is too complicated, time and effort intensive. So often it is not worth and owners try to manage without re-registering. If Govt can simplify the process, more people will come forward to re-register.

Current process involves following steps

Step 1: Go to home state and get NOC from local police, RTO etc (depending on how far is your home state and how active the police and RTO staff there, factor 7-15 days of effort for all these)

Step 2: Fill dozens of forms (CMV form 27, 28, 33, State crime record bureau report and so on) - each form has a fee to be paid.

Step 3: Submit all documents (RC, address proof, ID proof, insurance, photographs, local address proof, invoice and so on)

Step 4: Pay life time tax again (they won't take the difference from home state RTO directly, we have to pay again and apply for proportionate refund in home state RTO again- another visit and another week of effort dealing with stupid red tape). Tax to be paid as Demand Draft only, so be ready to spend half a day in bank. No Google Pay, no online transfer. Additional fines and penalty applies if you delay, don't meet some rules etc.

Step 5: Physical inspection: Someone from RTO will physically inspect the vehicle and sign- of course he/she won't be available most of the time- you have to pay bribe or go through an agent to expedite the process.

Step 6: Wait. Your old RC is gone, you will have some challans and slips to show to local police that you have initiated the process, but the process may take months or years. Welcome to new state!

Step 7: Seek refund from home state RTO. After re-registration you've to go back to home state RTO and seek proportionate refund of life time tax paid.

Getting local registration number is another additional process- doesn't happen automatically.

Problems in current process:

1. Can't go back to earlier state: if a TN vehicle owner re-registers in KA, his/her TN number is gone. If he decides to go back to TN next year, he/she has to repeat the entire process again. In today's situation people get transferred often, shift cities and keep moving. The law is too outdated and needs to be modernized to match realistic situations of vehicle owners. There should be a provision to retain old number and activate it on need basis without any complicated process.

2. Cost of process may exceed cost of bike: Cost of all formalities may exceed the cost of vehicle. Like for a 50k bike if you have to travel to another state, get local NOC, come back, pay tax again, pay for forms, agents etc etc, the total expense will probably be more than resale value of bike.

Plus time spent by vehicle owner has its own value. If one is earning 60k per month and has to spend 15 days on this (going to home state, getting NOC, visiting RTO multiple times etc), then the time alone is worth 30k. If he has to spend another 15-20k in fees and expenses, whole thing is worth 50k, which might be higher than value of his two wheeler. It is cheaper to buy a second hand bike locally than follow these many complications.

3. Too complicated process: Govt needs local address for law & order purpose, tax they will get from petrol VAT and GST. Lot of things can be tracked using technology (are there any open cases/pending fines on this vehicle etc) instead of enforcing 1957 rules that demand tons of paperwork, weeks of effort for vehicle owner as well as govt staff. But no, our red tape won't be simplified. It is lot convenient for a Bengaluru resident with TN registered vehicle to go to Hosur once a month, fill petrol and show fuel bill, toll receipt and say he entered Karnataka only recently. 

For people staying in border who have to go other states regularly for work this is a real headache having to deal with traffic police every day.

Old registration process that didn't reveal state was better!

More reading on this:

1. Quora: 

2. Citizen matters

What Govt can do to simplify the vehicle re-registration process?

#1 Give a temporary registration option- Owner pays a small fee, informs RTO that he/she is using the vehicle in their state. Give them 6-12 month time to decide what to do next- sell it in home state or re-register or go back to home state etc.

#2 Use technology where possible- to get NOC, to collect fees etc. Reduce number of forms, documents and process involved in vehicle re-registration

#3 Have uniform tax rates so that there is no incentive to register the luxury vehicle in some other state just to save few lakhs in taxes

#4 Make rules public- how many days other state vehicle can operate, what are the accepted evidence that the vehicle entered only recently, what is the fine for delay/extra stay etc. This prevents traffic police from harassing motorists.

#5 Stop worrying about tax loss: Other state vehicles bring revenue via petrol VAT, toll GST, spare & services GST etc. Also remember your state vehicles which paid tax to you might be in use elsewhere.

#6 Understand real life situations of vehicle owners- they might have been temporarily transferred to another state, they might have gone to home town after lockdown, one might be traveling across the country and so on. Total expense of re-registration might be more than resale value of the vehicle itself. Don't assume situation in 1957 is valid even now.

#	Step	Current Process	What should be done
1	Home State NOC	Owner has to physically visit home state, visit RTO multiple times, get NOC, come back	Let new state RTO check with home state RTO online- if there’s no pending chalans or police cases etc then it is NOC
2	LTT	Pay LTT again Ask for refund from home state again	Transfer of funds between home state and new state RTO directly, without owner having to pay anything
3	Application	Offline	Make it online
4	Physical inspection	Owner has to visit multiple times till RTO inspector finds time to inspect	Online appointment fixing. If Inspector doesn’t show up, he has to visit owner at home or work location
5	Old Number	Has to be surrendered	Keep option to retain and reactivate old no. in case owner moves back to home state

Let me know what you think!

Update: There is a proposal for IN number plate for select professionals, a registration number format valid across the country- read more here