Centre to examine used-vehicle transfer reforms after RTO cost study

By Akash Gupta · 05 Nov, 2026

Minister Harsh Malhotra said the Centre will examine used-vehicle transfer reforms after a 15-state index flagged delayed RC updates, uneven RTO processes and rising costs.

Centre to examine used-vehicle transfer reforms after RTO cost study

The Centre will examine reforms to how used cars and two-wheelers change legal owners after Minister of State for Road Transport and Highways Harsh Malhotra said on 4 Nov 2026 that the government is working on policies to simplify transfers. The announcement matters because a new 15-state index found that delayed Registration Certificate (RC) updates, uneven Regional Transport Office (RTO) procedures and interstate tax differences can add cost and uncertainty after a vehicle sale.

Key takeaways

Malhotra said the Centre will examine recommendations from the Ease of Vehicle Ownership Index (EVOI) 2026; no new transfer rule or implementation date was announced.
The index ranked Andhra Pradesh first at 5.91 out of 10 and Uttar Pradesh last at 2.47; no assessed state scored above 6.
In the report's survey of 1,000 buyers and sellers, 39% said their RC transfer was still pending after the transaction, while only 9.6% reported completion within two weeks.
The report's comparison put road tax on a ₹6 lakh petrol vehicle at 3% in Uttar Pradesh and 14% in Karnataka and Telangana, a difference of more than ₹66,000 on the same base price.
For now, buyers and sellers still need to follow the existing transfer process and confirm the RC, pending challans, hypothecation, insurance and interstate tax requirements.

What the Centre said

Malhotra was speaking at the launch of the EVOI 2026 report, prepared by IndiaTech.org and Consumer VOICE. The index benchmarks the used-vehicle ownership-transfer experience across 15 states. According to PTI reporting carried by Rediff and a separate report by Autocar Professional, the minister acknowledged that differences in state-level policy and implementation create problems for consumers and said the recommendations would be examined by the ministry.

This is an expected policy review, not a notified change. Autocar Professional reported that the minister did not announce a specific amendment to the Central Motor Vehicles Rules, a start date or a guaranteed service timeline. States continue to administer many parts of the process, so a future central decision would still need a clear implementation path through transport departments and the VAHAN/Parivahan system.

What the ownership index found

The report uses six measures: policy and regulation, digital infrastructure, process efficiency, transparency, institutional support, and cost and affordability. Andhra Pradesh scored 5.91, followed by Kerala at 5.74. Tamil Nadu and Delhi scored 4.58 each, while Uttar Pradesh scored 2.47, behind Bihar at 2.51 and West Bengal at 2.56. These are composite index scores, not official approval rates or a guarantee that every RTO in a state will deliver the same experience.

The consumer findings show why the issue matters after a used-car or bike deal is signed. The report says 39% of respondents were still waiting for the RC transfer after completing their transaction. Only 9.6% said the process finished within two weeks, while 61.5% were unaware of physical-appearance requirements, often referred to as Party Peshi, until reaching the RTO. The report also found that 63% could not accurately estimate the total transfer cost and that respondents commonly relied on agents or intermediaries.

The cost figures are reported transaction experiences, not a single national fee list. In Bihar, the index recorded total costs of ₹13,000–₹14,000 in the locations covered. In parts of Tamil Nadu, respondents reported ₹7,000–₹8,000 against an official fee of about ₹800. The report says those totals can include intermediary charges and manual stages, so the figures should not be treated as the statutory fee for every buyer or seller.

Why interstate transfers can become expensive

Road tax is a separate pressure point when a used vehicle moves between states. For a standard ₹6 lakh petrol vehicle, the report compares a 3% road-tax rate in Uttar Pradesh with 14% in Karnataka and Telangana, creating a difference of more than ₹66,000 on the same base price. The eventual cost for a specific vehicle depends on the applicable state law, vehicle age, registration details and refund rules.

An interstate buyer may also have to deal with a No Objection Certificate, re-registration, a new tax payment and a refund claim in the original state. The index says Andhra Pradesh and Telangana were the only assessed states with a functional road-tax refund pathway, with reported processing of 15–30 days. That is a finding from the study, not a promise that a refund will arrive within that period in every case.

Ownership transfer also intersects with vehicle finance and insurance records. The index identifies delays in removing loan hypothecation as a transaction bottleneck and proposes bank-VAHAN integration. It separately recommends clearer insurance continuity during a transfer. Buyers comparing cover can use the third-party versus comprehensive car insurance checklist to understand the difference between mandatory liability cover and optional protection; the article does not replace the policy wording or a state transport requirement.

What changes now for buyers and sellers

There is no immediate change to the legal filing route because of the index launch. The current mParivahan ownership-transfer guidance describes Form 29 for reporting a sale and Form 30 for the ownership-transfer application, along with the registration, insurance and other documents that may be required. MoRTH's current Central Motor Vehicle Rules chapter remains the primary reference for the transfer framework.

Checks to make during a used-vehicle transaction

Confirm that the seller has initiated the transfer on the applicable VAHAN service and keep the application number, payment receipt and acknowledgement.
Match the RC details with the seller's identity and the vehicle, then check for pending challans, a loan hypothecation entry or an unresolved NOC.
Ask for a written breakup of statutory fees, road tax, re-registration charges and any agent or service fee. Do not treat a quoted total as a government fee without checking the state transport schedule.
For an interstate purchase, confirm the destination-state tax, the original-state refund route and who will submit each document before handing over the full payment.
Keep the insurance certificate and ownership-transfer evidence together, and confirm when the policy record will be updated. The transfer of a vehicle record and the transfer or endorsement of insurance are related but separate checks.

Running cost is another part of the ownership decision. After estimating the transfer and tax outlay, a buyer can use the fuel cost calculator to compare a vehicle's expected monthly fuel spend using its distance and mileage assumptions.

What to watch next

The next meaningful development would be a formal MoRTH proposal, a notification amending the Central Motor Vehicles Rules, or a state-level implementation circular. Until one of those appears, the EVOI recommendations remain proposals. The practical test will be whether a future system can connect the seller, buyer, lender, insurer, challan records and state tax portals without shifting the same paperwork between offices.

For a used-vehicle buyer or seller, the immediate takeaway is simple: a digital application does not by itself prove that the RC has changed. Keep evidence of the transaction, verify the final RC status and treat road-tax refunds, hypothecation removal and insurance updates as separate completion steps.