The state tax department is gearing up to impose Goods and Services Tax (GST) on revenue generated by the transport department through online auctions of sophisticated vehicle registration (VIP) numbers.

The department is also considering levying GST on the revenue generated by the transport department through the license fees it charges from driving schools in the state.

Officials contend that offering premium registration numbers constitutes a value-added service under GST regulations, making it taxable at the rate of 18% or more.

“We recently asked the Department of Transport for information on the revenue they earn through online booking and subsequent auction of fancy registration numbers, and it was found that between 2018-19 and December 2023, more than ₹They earned 285 crore additional revenue from this practice alone,” said a senior state tax official.

This period also includes two years of COVID years where vehicle sales were nominal.

Certain registration numbers remain in high demand among buyers. Previously, the transport department received recommendations and pressure from various quarters for the allocation of these numbers, 0786 for example. To avoid this situation, the ministry has started selling these numbers through online auctions. Many buyers pay ₹1 to 2 lakh or even more for some numbers considered auspicious.

Information collected from the transport commissionerate revealed that in 2018-19, the department sold 40,752 fancy numbers, generating an additional income of ₹24.89 crore and in 2019-20, 32,653 issues were sold, earning ₹25.46 crore revenue.

The numbers increased slightly in 2020-21, when 35,277 issues were sold for ₹30.06 million. The upward trend continued in 2021-2022 when the ministry gained ₹46.32 crore by auctioning 55,071 numbers.

The figures increased significantly in 2022-23, allowing the transport department to generate additional revenue of ₹72.44 crores by auctioning 99,140 fancy numbers. Breaking all previous records in 2023-24, the department sold 137,344 fancy numbers, earning a whopping ₹99.03 million.

The state tax department official said necessary steps are being taken to levy GST on the transport department’s revenue from online auction of fancy numbers as it is not a necessity, but a luxury that some buyers indulge in.

“The GST levy will not affect the transport department as they can still collect GST from buyers and pay it to us as indirect tax,” the official said.

Besides, the state tax department is considering imposing GST on license fees collected from driving schools. It has also come to light that the transport department is not registered under GST and the tax department has asked it to complete the registration process.