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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
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
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.
OPERATOR FINANCIAL POSITIONS (2014-15)
THE TAX/DUTY REGIME FOR PUBLIC BUS TRANSITAverage Cost Breakup for 48 Public Bus Operators - 2015
THE TAX/DUTY REGIME FOR MASS-RAPID TRANSIT
Wealth Tax Fringe Benefits Tax
Metro Rail Systems
THE TAX/DUTY REGIME FOR PUBLIC BUS TRANSIT
Stamp Duty Property Tax Excise Duty
Customs DutyVAT/Sales TaxEntry Tax
Octroi Motor Vehicle Tax Passenger Tax
Service TaxLabour CessMunicipal Levies
State Transport Undertakings/Transport Corporations
THE TAX/DUTY REGIME FOR PUBLIC BUS TRANSIT
Stamp Duty
Property Tax
State Transport Undertakings/Transport Corporations
Excise Duty
Customs Duty
VAT/Sales TaxEntry
Tax/OctroiExcise Duty
Customs Duty
VAT/Sales TaxEntry
Tax/Octroi
MV Tax
Passenger Tax
Ad. Tax
Service Tax
Labour Cess
Municipal Levies
THE TAX/DUTY REGIME FOR PUBLIC BUS TRANSIT
Stamp DutyProperty Tax
State Transport Undertakings/Transport Corporations
Excise Duty
Customs Duty
VAT/Sales Tax
Entry Tax/Octroi
MV Tax Passenger TaxAd. Tax
Service Tax
Labour Cess Municipal Levies
PREVIOUS RESEARCH ON TAXATIONAssociation 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.
PREVIOUS RESEARCH ON TAXATIONKharola & 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.
PREVIOUS RESEARCH ON TAXATIONMahalingu & Madegowda 2011
OVERVIEW OF WRI’S TAX RESEARCH
A more recent (post-2011) look at tax trendsVariations in tax across statesBest practices in taxation, both India and globallyThe 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, UPSRTCFocus on direct and fuel taxes
Direct taxes: 2011-2015; fuel taxes: 2013-2015
TAX VARIATIONS ACROSS STATESMotor Vehicle Tax
%
FANCY
DIRECT TAX TRENDSCity Operators
DIRECT TAX TRENDSState Operators
DIRECT TAX TRENDSFinancial Position of City Operators after Direct Taxes
Sl. OperatorRevenue Position
2011
2012
2013
2014
2015
1 BEST
2 BMTC
3 CSTC
4 DTC
5 MTC
DIRECT TAX TRENDSFinancial Position of City Operators without Direct Taxes
Sl. OperatorRevenue Position
2011
2012
2013
2014
2015
1 BEST
2 BMTC
3 CSTC
4 DTC
5 MTC
DIRECT TAX TRENDSFinancial Position of State Operators after Direct Taxes
Sl. OperatorRevenue Position
2011
2012
2013
2014
2015
1 APSRTC
2 GSRTC
3 KSRTC
4 RSRTC
5 UPSRTC
DIRECT TAX TRENDSFinancial Position of State Operators without Direct Taxes
Sl. OperatorRevenue Position
2011
2012
2013
2014
2015
1 APSRTC
2 GSRTC
3 KSRTC
4 RSRTC
5 UPSRTC
FUEL TAX TRENDSCity Operators
FUEL TAX TRENDSState Operators
FUEL TAX TRENDSFinancial Position of City Operators after Fuel Taxes
Sl. OperatorRevenue Position
2013 2014 2015
1 BEST
2 BMTC
3 CSTC
4 MTC
FUEL TAX TRENDS
Sl. OperatorRevenue Position
2013 2014 2015
1 BEST
2 BMTC
3 CSTC
4 MTC
Financial Position of City Operators without Fuel Taxes
FUEL TAX TRENDS
Sl. OperatorRevenue Position2013 2014 2015
1 APSRTC
2 GSRTC
3 KSRTC
4 RSRTC
5 UPSRTC
Financial Position of State Operators after Fuel Taxes
FUEL TAX TRENDSFinancial Position of State Operators without Fuel Taxes
Sl. OperatorRevenue Position2013 2014 2015
1 APSRTC
2 GSRTC
3 KSRTC
4 RSRTC
5 UPSRTC
FUEL TAX TRENDSExcise Duty Revisions
COMPOSITION OF TAXES – DIRECT/FUELCity Operators
COMPOSITION OF TAXES – DIRECT/FUELState Operators
WHO GETS THESE TAXES?City Operators
WHO GETS THESE TAXES?State Operators
LET’S GET AMBITIOUSCity Operators
Sl. OperatorRevenue Position
2013 2014 2015
1 BEST
2 BMTC
3 CSTC
4 MTC
LET’S GET AMBITIOUSCity Operators
Sl. OperatorRevenue Position
2013 2014 2015
1 BEST
2 BMTC
3 CSTC
4 MTC
LET’S GET AMBITIOUSState Operators
Sl. OperatorRevenue Position2013 2014 2015
1 APSRTC
2 GSRTC
3 KSRTC
4 RSRTC
5 UPSRTC
LET’S GET AMBITIOUSState Operators
Sl. OperatorRevenue Position2013 2014 2015
1 APSRTC
2 GSRTC
3 KSRTC
4 RSRTC
5 UPSRTC
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
THE PRINCIPLE OF A TRANSPORT SUBSIDY
Technical Fare – User FareTotal operational cost
Number of passengers
Average fare paid per passenger
A product of WRI Ross Center for Sustainable Cities
THANK YOU
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