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Also called congestion pricing or congestion charge, this tax is a fee charged to vehicles for using busy roads or entering congested city areas during peak hours.
Typically, cities identify high-traffic areas – city centers or major corridors – and require drivers to pay a fee if they enter or drive through these areas during rush hours (such as morning and evening rush hours). (AI-generated image)
It’s a Monday morning, and you leave for work much earlier than Google Maps suggests, to avoid traffic jams. But unfortunately for you, you’re not the only one who has had this thought come to mind. Just minutes into your journey, you’re already cursing pedestrians walking on the road, a stray cow chewing on a plastic bag, sloppy two-wheelers and cars that probably think they’re on an F1 track.
It’s in these moments that you wonder if there might be a way to streamline traffic, reduce the number of vehicles on the road, and get cleaner air. A Mumbai councilor has come up with a unique panacea for all traffic problems, suggesting a congestion tax in the financial capital’s Central Business Districts (CBD).
In a detailed letter to BMC Commissioner Bhushan Gagrani, BJP’s Makarand Narvekar has argued that unregulated private vehicle use has increased congestion in high-density commercial areas, especially in South Mumbai. He suggested that private vehicles entering identified high-traffic areas, especially those carrying only a single passenger, should be charged congestion charge during peak hours.
According to his proposal, a fee of Rs 50 to Rs 100 per entry could be charged from vehicles entering the notified CBD areas between 8 am to 11 am and again between 5 pm to 8 pm. The areas can be identified using CCTV surveillance and Automatic Number Plate Recognition (ANPR) cameras already installed across the city.
But what exactly is a congestion tax, have any countries implemented it and does it actually work? News18 investigates in depth
concept of congestion tax
Also called congestion pricing or congestion charge, this tax is a fee charged to vehicles for using busy roads or entering congested city areas during peak hours. The idea is to reduce traffic, cut pollution and make cities grow faster.
Typically, cities identify high-traffic areas – city centers or major corridors – and charge drivers if they enter or drive through these areas during rush hours (such as morning and evening rush hours). Since the idea is to keep traffic flowing, cameras, number-plate recognition, GPS or electronic tags are used to track vehicles and no toll booths or barriers are planned. Drivers pay online, through apps, or through prepaid passes and may face fines if they skip collecting the congestion tax.
In his proposal, Narvekar has also said that congestion charge should be collected automatically through Fastag-based system to avoid manual intervention and traffic disruptions at entry points.
Why do cities use it?
The biggest change the congestion tax seeks to bring about is in public behavior because when the cost of driving at peak times is higher, people are forced to shift to public transportation, carpooling or off-peak travel. This has an unexpected benefit – cleaner air because fewer vehicles means fewer emissions.
Since roads are less congested, buses, ambulances and essential services run faster. In addition, the money collected is usually reinvested in metro systems, buses, cycling lanes and road upgrades.
In the case of Mumbai too, the councilor has suggested that the revenue generated from the tax, estimated at Rs 200 to 300 crore annually, could be used for air quality improvement measures and strengthening public transport infrastructure.
Have other Indian cities also considered this?
Yes, other metros have also thought of imposing the charge but no one has implemented it yet.
Delhi: According to The Times of India, Delhi’s transport department had planned to impose a congestion tax (sometimes called congestion pricing) on vehicles entering the city during peak hours to curb traffic and pollution, modeled on cities like London, Singapore and New York. The plan envisioned a fee at major border points (about 13 entry points) during morning (for example, 8 am to 10 pm) and evening peak hours with exemptions for two-wheelers, electric and other low-polluting vehicles. However, a major hurdle is that the Motor Vehicles Act currently does not have explicit provisions to allow a congestion tax, meaning that legal changes or new legislation would be required before it could be implemented.
Bengaluru: Bengaluru has serious traffic problems, and officials are considering a congestion tax for solo drivers entering busy stretches like the Outer Ring Road during peak hours. While experts say such a tax could encourage carpooling and boost public transportation use, they also warn that public transportation systems need to be strengthened before the levy can be justified or effective.
How about other countries?
A decades-old idea, congestion pricing has a real-world implementation. One of the oldest systems is being followed in London. Vehicles entering central London have to pay a fee during the day, with enforcement agencies using automatic plate recognition to identify vehicles. With reduction in traffic and better funding for public transport, there have been manifold improvements.
Singapore is much older, having pioneered the concept in the 1970s with the Area Licensing Scheme and later Electronic Road Pricing (ERP). The fee is adjusted in real time depending on traffic conditions.
In 2025, New York City introduced a $9 daily fee to enter Manhattan’s central business district with the aim of reducing congestion and raising funds for transit. Early results show fewer cars, faster traffic and more public transit use.
Why was congestion tax not removed in India?
According to The Times of India, the biggest reason is the lack of strong public transport options. Experts say congestion pricing works best when people have viable alternatives to driving. For example, London’s congestion charge succeeds partly because of its dense, reliable tube and bus network, while Singapore’s system works because of an extensive MRT system that provides a real alternative to cars.
In contrast, many Indian cities still do not have robust and reliable public transportation. Metro networks are still expanding in many cities, and bus ridership has seen a decline. Furthermore, suburban rail systems are delayed or underdeveloped. The problem for commuters is that last-mile connectivity remains weak in most cities, leaving them with no good option but to use private vehicles. In the absence of strong alternatives, the congestion tax will feel more like a punishment than a proper incentive to change behaviour.
There are also legal and policy shortcomings. For example, in some cases, existing laws do not explicitly allow congestion pricing. For example, in Delhi, officials noted that the Motor Vehicles Act does not include specific provisions for charging vehicles for entering certain areas, meaning a new legal framework or amendments would be required before implementation, according to Business Standard. This increases complexity and slows down policy making, as the government must create a legal basis before testing or implementing any measures.
Congestion taxes are controversial, even in cities with strong transportation systems. In India, governments are wary of public reaction because people view tariffs as just another burden without clear benefits. Many drivers also argue that they already pay high taxes and fees, and additional fees would unfairly penalize them. Furthermore, leaders often prioritize the construction of roads, flyovers or other visible infrastructure projects (which are more politically popular) rather than controversial pricing policies.
An ORF paper by Ramanath Jha also argues that in the absence of obvious congestion areas, reliable technology for automatic charging (such as GPS or camera systems) and strong inter-departmental coordination, such charges would be difficult to implement.
Instead, the article recommends that to make congestion pricing feasible and acceptable in India, the need of the hour is to build robust public transportation such as reliable buses, metros and non-motorized options before charging drivers.
Furthermore, the system should be designed using electronic road pricing, GPS and automatic vehicle identification so that there is no major disruption to traffic flow. There should also be extensive public consultation and communication about the long-term benefits (reduced congestion, cleaner air, shorter travel times), which can help build acceptance. Jha also says charging plans should include fairness, such as tiered charging, rebates and reinvestment of revenues in public transportation improvements.
February 09, 2026, 12:29 IST
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