A committee has proposed replacing the existing three-tier tax structure for contract carriage buses in Telangana with a uniform tax of ₹1,510 per seat per quarter for State-wide permits.

Existing permit-wise tax rates

The report on ‘Rationalisation of Tax on Contract Carriage Buses Plying within Telangana’, submitted by Transport Commissioner K Ilambarithi, recommended replacing the existing permit-wise tax rates of ₹1,120 for One District Permits, ₹1,510 for Two District Permits and ₹3,285 for State Permits with a uniform rate. The proposal covers contract carriages permitted to carry more than 12 persons, excluding the driver. The committee studied and compared tax slabs of various states including Kerala, Karnataka, Maharashtra and Odisha before concluding that the recommended tax slab is “moderate” in nature.

Backdrop of the proposal

The proposal comes against the backdrop of several factors, including the reorganisation of districts in October 2016, which increased their number to 33. The report notes that the average area of a district has reduced to less than one-third of what it was earlier. As a consequence, contract carriages that could previously operate across larger districts now require temporary permits (TPs) to travel to neighbouring districts for routine operations.

Misuse

The number of temporary permits issued to contract carriages rose from 26,510 in 2021-22 to 84,418 in 2025-26, an increase of about 218%, the report observed. It also flagged the alleged misuse of temporary permits by operators. According to the committee, some One District Permit holders have been repeatedly obtaining TPs to operate across districts for much of the year, thereby paying less than the tax applicable to State Permit holders.

Mr. Ilambarithi submitted the recommendations to Special Chief Secretary of Transport, Roads and Buildings Department Vikas Raj.