The state government introduced the revised one-time tax system through a notification on January 30, 2026, under the Motor Vehicles Taxation (Amendment) Act, 2025. Notably, the new system provides an annual rebate of 8% for older vehicles, reducing the overall tax burden over time.

The anomaly surfaced during a routine review at the regional transport office (RTO) in Lucknow. In one case, a goods carrier registered in October 1995 carried a tax liability of just ₹1 as of April 1, 2026. With a rebate of the same amount reflected on the portal, the payable tax reduced to zero. Several similar instances were flagged, prompting further scrutiny.

Officials said inquiries are underway to determine how tax is being generated for a nearly 30-year-old vehicle. Goods carriers in India typically operate for a maximum of 20 years before mandatory deregistration, subject to fitness tests after 15 years. Officers are also verifying whether the registration certificate (RC) of such vehicles remains active or has expired.

“Wrong entry of vehicle cost led to incorrect tax calculation. All such vehicles have been blacklisted and the records are being verified,” said PK Singh, ARTO (administration). Preliminary findings indicate that incorrect vehicle purchase values were entered into the VAHAN software, which calculates the one-time tax.

The preliminary inquiry was conducted in the first week of April. Among the 75 vehicles identified, several carried a tax liability of ₹3, with an equivalent rebate applied, reducing the payable amount to zero, officials said.

The revised system requires commercial vehicle owners to pay road tax upfront as a lump sum based on the vehicle’s cost: 10.5% for vehicles priced below ₹10 lakh and 12.5% for those above. This replaces the earlier quarterly payment system, which imposed a 5% monthly penalty on delays.

Meanwhile, transport operators have raised concerns over paying large sums upfront, citing disruption to business operations. Previously, they paid tax every three months.

The RTO has written to the additional transport commissioner (IT), proposing that such cases be handled at the office level rather than relying solely on the online system.

What is one -time tax?

The one-time tax system is a revised taxation mechanism for commercial vehicles under which the entire motor vehicle tax is paid in a single lump sum instead of periodic payments. Commercial vehicle owners must pay road tax upfront based on the vehicle’s cost. The system replaced the earlier quarterly payment structure, under which operators paid tax every three months with a 5% monthly penalty imposed on delays.