Mumbai car dealers have been given seven days to explain alleged out-of-state registrations of luxury vehicles that authorities say may have avoided Maharashtra’s higher motor vehicle taxes. As of October 25, 2026, regional transport offices had issued show-cause notices to 19 dealers and flagged 287 vehicles.
Key Takeaways
- The notices do not mean any dealer’s licence has already been suspended or cancelled.
- Authorities allege that some registration documents falsely suggested buyers lived or operated businesses in Diu and Daman.
- Owners may face tax assessments, depending on their vehicles’ registration and use.
Why Mumbai car dealers received notices
Regional transport officials allege that some dealerships temporarily registered new vehicles in Mumbai before obtaining permanent registration in Diu and Daman, where vehicle taxes are lower. Some dealers allegedly submitted fabricated leave-and-licence agreements as evidence that buyers lived or operated businesses there, although the vehicles were delivered and driven in Maharashtra.
Transport Commissioner Rajesh Narvekar said showrooms had misled buyers about their tax liabilities. Dealers could lose their trade licences if their responses to the notices are unsatisfactory; no cancellation has been confirmed.
| Item | Details |
|---|---|
| South Mumbai | 68 luxury vehicles flagged |
| Eastern suburbs | 104 vehicles flagged between Kurla and Mulund/Mankhurd |
| Western suburbs | 115 vehicles flagged between Bandra and Dahisar |
The tax difference behind the investigation
Maharashtra’s one-time motor vehicle tax for private petrol cars is capped at Rs 20 lakh. RTO officials cited a 3% rate for petrol cars costing more than Rs 10 lakh in Dadra and Nagar Haveli and Daman and Diu.
For a hypothetical Rs 2 crore petrol SUV, those figures imply tax of Rs 20 lakh in Maharashtra and Rs 6 lakh in Diu and Daman, a difference of Rs 14 lakh. The example is not a confirmed amount evaded on any particular vehicle.
What the action means for owners
The immediate notices are directed at dealers, but owners of vehicles registered outside Maharashtra and primarily used in the state could also face questions about their tax and registration. Authorities intend to recover applicable Maharashtra taxes, including any difference due, and previously issued challans and tax assessment notices to some owners.
Owners can keep their purchase invoice, registration certificate, insurance, address documents and dealer-provided registration paperwork available for any RTO inquiry. Whether additional tax is payable depends on the facts of each case and the transport department’s assessment.
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