Toll Taxes Update: As India’s road infrastructure expands rapidly, so too is the revenue generated from toll taxes, setting new records. According to government estimates, toll collection could cross the ₹1 lakh crore mark for the first time in the financial year 2026-27. This will not only be a financial achievement but will also demonstrate that toll tax has become a strong and sustainable revenue source for the government.

The Changing Landscape Due to Highway Network Expansion

In recent years, India has witnessed a rapid expansion of its national highway and expressway network. The construction of new highways and the upgrading of existing routes have led to a significant increase in vehicular traffic. As traffic increased, so did the revenue collected from toll plazas, multiplying several times over. Currently, there are more than a thousand active toll plazas across the country, with many collecting crores of rupees daily.

Indications from FY24 and FY25 Figures

In the financial year 2023-24, India’s total toll collection reached approximately ₹64,800 crore, which was about 35 percent higher than the previous year. This figure was projected to increase further in FY25. These figures had already indicated that toll tax would become a crucial pillar of government revenue in the coming years.

FASTag Revolutionizes Toll Collection

The rapid increase in toll collection is largely due to FASTag and the digital payment system. The introduction of FASTag in place of cash payments has reduced waiting times at toll plazas and made the collection process more transparent. According to the government’s plan, cash payments at toll plazas will be almost completely phased out from April 1, 2026, further streamlining toll collection.

MLFF System to Further Boost Revenue

The government is preparing to implement a satellite-based Multi-Lane Free Flow (MLFF) system in the future. This technology will allow vehicles to pay tolls while moving without stopping. This will not only reduce traffic congestion but is also expected to increase toll collection capacity manifold.

Where does the money collected from tolls go?

The money collected from toll taxes does not go directly into the government treasury, but is used for the construction, maintenance, and development of the road network and new infrastructure projects. This helps in the construction of new highways, expressways, and bridges. In addition, a portion of this fund is also used to repay old debts and make payments to private companies.

Government and Private Sector Participation in the PPP Model

Many toll plazas in India are operated under the Public-Private Partnership (PPP) model. In this model, the government sets the policies and regulations, while private companies take responsibility for road construction and toll operations. This reduces the financial burden on the government and makes it easier to complete large infrastructure projects on time.

How Much Does the Government Earn from Toll Taxes, Where Does It Spend the Money?

Related Articles