State-Wise Car Prices in India: Which States Save You the Most in 2025?

Road tax, also known as motor vehicle tax, is a mandatory charge applied to every new vehicle purchase. This tax can significantly impact the on-road price of the vehicle, which is why car prices often come with disclaimers noting that the final cost depends on the state of purchase.

The rate of road tax varies from state to state, and there’s no way to avoid paying it. The tax amount is determined by factors such as the vehicle’s engine capacity, seating capacity, unladen weight, and price.

Collected road tax is used for the maintenance of roads and other infrastructure to ensure a smooth driving experience. This detailed blog compares state-wise car prices in India to help buyers understand how local levies affect on-road car prices in India 2025. We will show you which are the states in India with high and low car on-road prices that’ll help you get an idea of how your residing location affects car ownership.

Factors Affecting Car On-Road Prices

The highest and lowest road taxes in India depend on a number of factors. In India, the on-road price of a car is decided based on many factors, including the following:

• Taxes and Government Regulations: A number of taxes like GST (Goods Service Taxes), road tax and car registration charges by state are some of the components that are reflected in the on-road price of the car.
• Manufacturer’s Base Price and Additional Charges: Manufacturer’s base price, dealer margin, logistics and handling charges are added for a vehicle cost.
• Input Costs: Rising costs of steel, aluminum or precious metals can increase the prices of a vehicle.
• Supply and Demand: When demand is high and supply is low (which can be further compounded by factors like the global semiconductor shortage), car prices tend to go up.
• Economic Factors: Car prices are also affected by inflation and currency fluctuations.
• Technological Advancements: The incorporation of the latest technologies and adherence to more stringent safety and emission norms, increases the cost of production which is eventually passed on to the consumers.

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States with the Highest Car On-Road Prices

The states with the highest road taxes in India on cars are primarily high because of their road taxes. In this section, we’ll discuss the three states with the highest road tax rates. Let’s analyze each of them.

1. Karnataka

Karnataka has consistently had the highest on-road vehicle prices in India due to its steep road tax rates. Cities like Bengaluru and Mysuru contribute to these high costs with significant road tax and additional local levies, making car purchases more expensive. This makes it the state with the highest road tax in India.

If we talk about the on-road taxes, for a four-wheeler priced below Rs 4 lakh, the road tax is 13% of the vehicle’s price. Whereas, for cars priced between Rs 5 lakh and Rs 10 lakh, the tax rate is 14%. 

On the higher side, vehicles costing between Rs 10 lakh and Rs 20 lakh face a tax of 17%, while those over Rs 20 lakh are taxed at 18%. 

Below is a table outlining the road tax structure in detail. The tax rates are as follows:

However, if you’re purchasing an electric car, the road tax is significantly reduced to just 4% of the vehicle’s price.

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2. Andhra Pradesh & Telangana

AP and Telangana have road tax structures similar to Karnataka but with simpler rates. For cars priced under ₹10 lakhs, the tax is 12%, while for cars priced above ₹10 lakhs, it is 14%. 

Additionally, in Andhra Pradesh, there is a 2% tax reduction for purchasing a second vehicle under the same name.

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3. Maharashtra

In Maharashtra, particularly in cities like Mumbai and Pune, car on-road prices are among the highest in India. This is largely due to the state’s substantial road tax and high insurance premiums. 

For cars priced below ₹10 lakhs, the road tax rates vary: 7% for CNG vehicles, 11% for petrol vehicles, and 13% for diesel vehicles. The tax structure can be somewhat complex, so please refer to the table below for detailed information.

For registering company vehicles, the tax rates are twice as high as those mentioned above.

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States with the Lowest On-Road Prices of Cars

Once again, the states with the lowest road tax in India on cars are primarily due to their lower road taxes. Here are some cheapest states to buy a car in India: 

1. Delhi

In Delhi, car on-road prices tend to be lower because the state has relatively low road tax and registration fees compared to other regions in India. 

This means that when you buy a car in Delhi, you pay less in taxes and additional charges, which helps reduce the overall cost. For instance, Delhi often has lower registration fees and exemptions or reductions in road tax, making it more affordable for car buyers.

For petrol cars priced up to Rs 6 lakh, the tax is just 4%, and for diesel cars in the same price range, it’s 5%. If the car costs between Rs 6 lakh and Rs 10 lakh, the tax for petrol cars increases to 7%, while diesel cars face an 8.75% tax. Here’s a table to help clarify the tax rates:

There are also MCD parking charges: Rs 2,000 for cars priced under Rs 10 lakh and Rs 4,000 for vehicles priced above Rs 10 lakh.

2. Puducherry

Puducherry, a Union Territory in India, offers lower car prices thanks to its friendly tax rates and low registration fees. This makes it the state with lowest road tax in India.

The region’s tax policies make it a great place for buying cars. Because Puducherry is small and has lower administrative costs, car prices are more affordable here. 

For cars priced up to Rs 5 lakh, the registration fee is Rs 8,000. For those between Rs 5 lakh and Rs 8 lakh, it’s Rs 11,000, and for cars costing between Rs 8 lakh and Rs 15 lakh, the fee is even higher. 

Other taxes apply to even more expensive cars, as shown in the table below.

3. Assam

In Assam, buying a car is often cheaper because the state has low taxes and registration fees. The government has made it easier to own a car by cutting road taxes and offering other benefits. Since living costs in Assam are lower than in many other states, car prices are also more affordable. This makes it the cheapest state to buy a car in India.

For instance, if your car costs up to Rs. 4 lakh, the tax is 5%. For cars priced between Rs. 4 lakh and Rs. 6 lakh, the tax is 6%, and for cars between Rs. 6 lakh and Rs. 12 lakh, it’s 7%. 

There are additional taxes for higher-priced cars, which you can see in the table below.

These states offer relief to car buyers in terms of overall cost. If you’re hunting for the cheapest state to buy a car in India, places like Delhi and Gujarat definitely top the list.

Top 5 Cheapest vs Costliest States to Buy a Car in India (2025)

Here’s a quick snapshot of state-wise car prices in India 2025, comparing the cheapest and costliest states to buy a car based on road tax percentages.

Note: These tax rates are indicative and apply to private vehicles priced around ₹10 lakh. Exact percentages may vary based on fuel type, segment, and local transport policies.

Conclusion

Car on-road prices in India vary widely across states due to differences in taxes, registration fees, and local charges. If you’re looking to save money, considering states with lower costs is essential. 

For those seeking the cheapest RTO in India, exploring regions with lower road taxes and car registration charges by state can lead to significant savings. Always check local regulations to find the best deals and make an informed decision for your next car purchase. To buy a used car, visit OLX India and explore a wide range of listed options.

FAQs

1. Which state has the lowest on-road car prices in India?
Delhi offers some of the lowest on-road car prices in India due to minimal road taxes and registration fees. It’s a preferred choice for budget-conscious car buyers.

2. Which Indian state has the highest car prices?
Karnataka has some of the highest on-road car prices, mainly due to higher road tax slabs and additional local levies in cities like Bengaluru.

3. Why do on-road car prices vary between Indian states?
On-road prices depend on factors like road tax, registration charges, insurance rates, and additional state-level charges. That’s why the same car can cost more or less across state borders.

4. Can I buy a car in a cheaper state and register it in my own?
You can purchase a car anywhere, but it must be registered in the state where you reside. Registering it in another state may not be legally valid unless you relocate and update the address officially.

5. Is it legal to drive a car registered in another state?
Yes, it’s legal—but if you’re using it in another state for over 12 months, you’re required to pay road tax again and transfer the registration to your current state.

6. What factors affect the on-road price of a car in India?
Key factors include ex-showroom price, GST, road tax, car registration charges by state, insurance, and handling charges. Fuel type and vehicle segment also influence the final cost.