Himachal Pradesh’s recent decision to hike vehicle entry taxes has sparked outrage among residents living along the Punjab-Himachal border. The revised rates, set to take effect from April 1, 2026, see local vehicles taxed at Rs 100, while five-seater vehicles from other states will now pay Rs 170. Commercial vehicles face steep increases of up to Rs 800. Daily commuters and business owners are expressing frustration, warning that the hike could severely impact livelihoods and cross-border trade.
Paramjit Singh Pamma, a municipal councillor from Nangal and former president of the District Bar Association, criticized the decision, calling it “illegal and unjustified.” He pointed out that Himachal Pradesh is currently the only state in India imposing an entry tax on vehicles registered in other states. Pamma emphasized that border residents commuting daily for work or business could end up spending nearly Rs 4,000 per month just to enter Himachal Pradesh. “This increase unfairly targets people who contribute to both states’ economies,” he added.
The Nangal municipal council had passed a unanimous resolution in June 2025 to levy a reciprocal tax on Himachal-registered vehicles, which could have discouraged the tax hike. However, no action has been taken by the Punjab government, prompting calls from leaders and residents for a clear stance on the issue.
Adding to the controversy, Advocate Uttansh Monga has filed a petition in the Himachal High Court. He argues that the state’s entry tax on national highways is unconstitutional and constitutes double taxation, as vehicles are already subject to NHAI tolls. RTI data cited by Monga suggests that Himachal Pradesh collects approximately Rs 150 crore annually from vehicles registered in other states. Critics claim this approach unfairly burdens non-residents while benefiting state coffers at their expense.
Residents of Ropar district are planning protests and intend to meet their MLAs to demand reconsideration of the tax hike. Local traders fear the move could reduce GST collections and harm cross-border business activity, undermining economic growth in the region. Officials indicate that Himachal Pradesh increased the entry tax partly to offset lost Revenue Deficit Grant (RDG) funds. However, the decision has clearly stirred tensions among border communities, who feel they are paying the price for state revenue shortfalls.
The key highlights of the issue include Himachal Pradesh’s entry tax hike effective April 1, 2026, with locals paying Rs 100 and out-of-state vehicles Rs 170. Commercial vehicles face increases of up to Rs 800. Border residents could spend nearly Rs 4,000 per month, and a legal challenge has been filed citing double taxation. Residents are planning protests and demanding government intervention.
This development highlights growing tension over cross-border taxation and the economic impact on daily commuters and businesses. With protests looming, both Punjab and Himachal governments may need to reconsider their strategies to avoid escalating disputes.