Commuters to be spared from tolls on small roads

Business Economy Finance
(Last Updated On: September 22, 2016)

The Centre has notified the scrapping of toll tax collections on small road stretches and bridges developed at a cost of less than Rs.100 crore. Analysts, however, expect only marginal relief for commuters as such road stretches are few and far between.

The initiative is based on the recommendations of a committee constituted by the Centre to examine and recommend the minimum eligibility criteria for charging toll fees. At present, the Central government has the power to exempt any section of a national highway, permanent bridge, bypass or tunnel from toll tax, according to the National Old Highways Fee (Determination of Rates and Collection) Rules 2008.

Old bridges

All road projects, standalone structures and road stretches in which the project construction cost is less than Rs.100 crore and old bridges for which residual recoverable project cost is less than Rs.100 crore will be exempted from toll tax collection, as per a notification issued by the Road Transport and Highways Ministry on September 9 that was reviewed.

However, the project cost will not include cost of pre-construction activity, utility shifting and land acquisition, the ministry added in the notification. Analysts said the toll tax exemption may only apply on local roads or bridges run by the National Highways Authority of India (NHAI) and may have limited impact on the national highways.

“In the last six years, there is only one project awarded by the NHAI which falls under the category of Rs.100 crore-project,” said Rajeshwar Burla, Assistant Vice President at ICRA Ltd. “The cost behind most of the projects was greater than at least Rs.250-Rs.300 crore, out of 245 projects awarded in this period,” he said.

 NHAI is yet to compile a list of road projects that may benefit from toll tax exemptions as per the latest directive, officials said.

Analysts also said the move may be triggered by rising complaints of non-compliance of toll fee collection on local road stretches. “In smaller projects that mainly cater to the local population, compliance is an issue,” said ICRA Vice President Shubham Jain. “Local commuters who travel on such roads on a daily basis develop resistance to paying toll .”

The move follows policies adopted by governments in BJP-ruled states to exempt toll taxes on some state highways.

Gujarat, Maharashtra

Recently, Gujarat exempted car, jeep and van category vehicles and state transport buses from tolls on state highways beginning August 15. As a result, nine public private partnership (PPP) projects were impacted and the government had vowed to compensate private developers for the revenue loss through monthly reimbursements.

Last year, Maharashtra had scrapped 12 toll plazas across the State and exempted small vehicles and State transport buses from having to pay at 53 other toll points.

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