The document analyzes the current taxation framework for public bus transport in India. It finds that taxes make up a significant portion of operating costs for bus operators, ranging from 11-19% on average. Direct taxes and fuel taxes on bus operators have increased over time for many city and state transport authorities. Removing these taxes could significantly improve the financial positions and viability of many public bus services. The principles of transport subsidies to maintain affordable fares while not financing inefficiencies are also discussed.

1. A product of WRI Ross Center for Sustainable Cities
ALOKE MUKHERJEE, AMIT BHATT, UMANG JAIN
BUS-BASED PUBLIC
TRANSPORT IN INDIA: THE
CURRENT SUBSIDY AND
TAXATION FRAMEWORK

2. PRESENTATION STRUCTURE – TAXATION
Understanding the
basket of taxes faced by
public bus operators
Previous research on
taxation with observed
trends
Overview of WRI’s tax
research
Recent trends in direct and
fuel taxation of public bus
operators
Tax variations across
states

3. OPERATOR FINANCIAL POSITIONS (2014-15)
*Note: DTC’s net revenue was INR -39,914 million in 2014-15; this axis was capped at -
15,000 million to improve readability.

4. OPERATOR FINANCIAL POSITIONS (2014-15)

5. THE TAX/DUTY REGIME FOR PUBLIC BUS TRANSIT
Average Cost Breakup for 48 Public Bus Operators - 2015

6. THE TAX/DUTY REGIME FOR MASS-RAPID TRANSIT
Wealth Tax FringeBenefitsTax
Metro Rail Systems

7. THE TAX/DUTY REGIME FOR PUBLIC BUS TRANSIT
Stamp Duty Property Tax Excise Duty
Customs DutyVAT/Sales TaxEntry Tax
Octroi MotorVehicleTax Passenger Tax
Service TaxLabour CessMunicipalLevies
State Transport Undertakings/Transport Corporations

8. THE TAX/DUTY REGIME FOR PUBLIC BUS TRANSIT
Stamp Duty
PropertyTax
State Transport Undertakings/Transport Corporations
Excise Duty
CustomsDuty
VAT/SalesTax
EntryTax/OctroiExcise Duty
CustomsDuty
VAT/SalesTax
EntryTax/Octroi
MV Tax
PassengerTax
Ad.Tax
ServiceTax
LabourCess
MunicipalLevies

9. THE TAX/DUTY REGIME FOR PUBLIC BUS TRANSIT
Stamp DutyPropertyTax
State Transport Undertakings/Transport Corporations
Excise Duty
CustomsDuty
VAT/SalesTax EntryTax/Octroi
MV Tax PassengerTaxAd.Tax
ServiceTax
LabourCess MunicipalLevies

10. PREVIOUS RESEARCH ON TAXATION
Association of State Road Transport Undertakings 2005
The poor financial performance of STUs in spite of their improving physical
performance is more due to the impact of the policies relating to motor
vehicle tax, concessions and universal service obligations, unviable fare
structure, and fuel price.
The total [Motor Vehicle] tax paid in 2004-05 by 36 STUs … was about Rs.1,516
crores which represented 11% percent of their traffic revenue.
…the States have usually treated STUs as an important source of revenue
while at the same time expecting them to provide inexpensive transport
services to the people.

11. PREVIOUS RESEARCH ON TAXATION
Kharola & Tiwari 2008
…of the total annual operating cost of a public transport system, about 19.02
per cent goes as taxes to the union and state governments.
The existing taxation structure is inequitable and not congenial for growth of
bus-based public transport systems.

12. PREVIOUS RESEARCH ON TAXATION
Mahalingu & Madegowda 2011

13. OVERVIEW OF WRI’S TAX RESEARCH
A more recent (post-2011) look at tax trends
Variations in tax across states
Best practices in taxation, both India and globally
The effects of reducing taxes on public operators
10 operators surveyed; 5 city and 5 state operators
City: BEST, BMTC, CSTC, DTC, MTC
State: APSRTC, GSRTC, KSRTC, RSRTC, UPSRTC
Focus on direct and fuel taxes
Direct taxes: 2011-2015; fuel taxes: 2013-2015

14. TAX VARIATIONS ACROSS STATES
Motor Vehicle Tax
%
FANCY

15. DIRECT TAX TRENDS
City Operators

16. DIRECT TAX TRENDS
State Operators

17. DIRECT TAX TRENDS
Financial Position of City Operators after Direct Taxes
Sl. Operator
Revenue Position
2011 2012 2013 2014 2015
1 BEST
2 BMTC
3 CSTC
4 DTC
5 MTC

18. DIRECT TAX TRENDS
Financial Position of City Operators without Direct Taxes
Sl. Operator
Revenue Position
2011 2012 2013 2014 2015
1 BEST
2 BMTC
3 CSTC
4 DTC
5 MTC

19. DIRECT TAX TRENDS
Financial Position of State Operators after Direct Taxes
Sl. Operator
Revenue Position
2011 2012 2013 2014 2015
1 APSRTC
2 GSRTC
3 KSRTC
4 RSRTC
5 UPSRTC

20. DIRECT TAX TRENDS
Financial Position of State Operators without Direct Taxes
Sl. Operator
Revenue Position
2011 2012 2013 2014 2015
1 APSRTC
2 GSRTC
3 KSRTC
4 RSRTC
5 UPSRTC

21. FUEL TAX TRENDS
City Operators

22. FUEL TAX TRENDS
State Operators

23. FUEL TAX TRENDS
Financial Position of City Operators after Fuel Taxes
Sl. Operator
Revenue Position
2013 2014 2015
1 BEST
2 BMTC
3 CSTC
4 MTC

24. FUEL TAX TRENDS
Sl. Operator
Revenue Position
2013 2014 2015
1 BEST
2 BMTC
3 CSTC
4 MTC
Financial Position of City Operators without Fuel Taxes

25. FUEL TAX TRENDS
Sl. Operator
Revenue Position
2013 2014 2015
1 APSRTC
2 GSRTC
3 KSRTC
4 RSRTC
5 UPSRTC
Financial Position of State Operators after Fuel Taxes

26. FUEL TAX TRENDS
Financial Position of State Operators without Fuel Taxes
Sl. Operator
Revenue Position
2013 2014 2015
1 APSRTC
2 GSRTC
3 KSRTC
4 RSRTC
5 UPSRTC

27. FUEL TAX TRENDS
Excise Duty Revisions

28. COMPOSITION OF TAXES – DIRECT/FUEL
City Operators

29. COMPOSITION OF TAXES – DIRECT/FUEL
State Operators

30. WHO GETS THESE TAXES?
City Operators

31. WHO GETS THESE TAXES?
State Operators

32. LET’S GET AMBITIOUS
City Operators
Sl. Operator
Revenue Position
2013 2014 2015
1 BEST
2 BMTC
3 CSTC
4 MTC

33. LET’S GET AMBITIOUS
City Operators
Sl. Operator
Revenue Position
2013 2014 2015
1 BEST
2 BMTC
3 CSTC
4 MTC

34. LET’S GET AMBITIOUS
State Operators
Sl. Operator
Revenue Position
2013 2014 2015
1 APSRTC
2 GSRTC
3 KSRTC
4 RSRTC
5 UPSRTC

35. LET’S GET AMBITIOUS
State Operators
Sl. Operator
Revenue Position
2013 2014 2015
1 APSRTC
2 GSRTC
3 KSRTC
4 RSRTC
5 UPSRTC

36. THE PRINCIPLE OF A TRANSPORT SUBSIDY
Maintain (or improve) service quality at affordable rates
Not to finance inefficiencies in the system
Inevitable across public transport worldwide

37. THE PRINCIPLE OF A TRANSPORT SUBSIDY
Technical Fare – User Fare
Total operational cost
Number of passengers
Average fare paid per
passenger

38. A product of WRI Ross Center for Sustainable Cities
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