Calcutta, July 1. The government today slashed the penalty to be charged for failing the car tax deadline.

Instead of levying the same amount as the tax as penalty, the transport department has created slabs of late fines (see chart). The department has promulgated an ordinance and the new system will be in effect from July 1.

The government had introduced payment of a five-year tax for vehicles registered after 1995 by framing a new law, The West Bengal Additional Tax and One-time Tax on Motor Vehicles (Second Amendment) Act, 2003. Tax for pre-1995 cars is still payable annually.

Individuals and the Automobile Association of Eastern India had moved the high court challenging the government order introducing the five-year tax. The case is still before the court and likely to be heard next week.

The new act had enabled the transport department to charge double the levy if the tax was not paid within due date.

The association had asked why a car owner who failed the due date and delayed for a short period would have to pay double the amount.

Under pressure from almost all car owners, transport minister Subhas Chakraborty unveiled a new penalty structure for delay in car tax payment.

The ordinance has given car owners a grace period of 15 days for tax payment from the date on which it becomes payable.

According to the ordinance, if a two-wheeler is taken away from the state permanently or if it is scrapped and its registration cancelled, the owner will get a tax refund. The amount will depend on the age of the vehicles.

Transport officials said the ordinance would not affect the tax structure. “As the introduction of one-time five-year tax for post-1995 vehicles is sub-judice, we will not comment on it. Our concern is on charging penalty to the defaulters and payment of refund, which is not under the consideration of the court,’’ an official said.

Chakraborty said the decision to charge the tax amount as penalty was wrong.

“It was a mistake. We did not notice it while drafting the bill. After realising the mistake, we promptly amended it. I admit that a car owner should not be levied double the tax amount as penalty if the person fails to pay within the due date,’’ Chakraborty said.

Automobile association secretary Tapan Debnath claimed victory in the government’s climbdown.