Madhya Pradesh Makes Dealer Authorisation Mandatory for Second-Hand Vehicle Trade
The Madhya Pradesh (MP) Transport Department has tightened regulations for dealers involved in the sale and purchase of old and second-hand vehicles across the state. The move is aimed at curbing unregistered and unregulated vehicle trading, which officials say has been causing legal complications for vehicle owners and revenue losses for the government.
Under the new rules, any dealer involved in the buying or selling of used vehicles will now be required to obtain an official authorisation certificate. Without this approval, dealers will no longer be allowed to operate legally.
Statewide enforcement and legal action against unauthorised dealers will begin from January 1, 2026, transport officials have confirmed.
Dealers Must Obtain Authorisation or Face Legal Action
The MP Transport Department has issued strict instructions to all Regional Transport Offices (RTOs) to identify and act against dealers operating without registration. Officials said many second-hand vehicle dealers currently function without any formal approval, leading to misuse of vehicles and evasion of taxes.
Once the new enforcement drive begins, unregistered dealers will face penalties, seizure of vehicles, and legal proceedings. The department has also clarified that showroom operators who accept old vehicles under exchange schemes will also need to obtain dealer authorisation.
This move is expected to bring greater transparency and accountability to the second-hand vehicle market.
Legal Protection for Vehicle Owners Through ‘Deemed Ownership’
One of the most significant changes under the new rules is the introduction of the concept of “deemed ownership” for authorised dealers. When a vehicle owner sells a vehicle to an authorised dealer, they must fill Form 29C under the Central Motor Vehicle Rules.
Once this form is submitted and recorded by the RTO, the dealer becomes the deemed owner of the vehicle in the official database. From that moment, the original owner is legally relieved of all responsibilities linked to the vehicle.
This means that if the vehicle is later involved in an accident, misuse, or any illegal activity, the original owner will not be held accountable. The vehicle records will reflect the dealer’s name, offering crucial legal protection to sellers.
Dealers Responsible for Documentation and GST Compliance
Under the new framework, maintaining updated vehicle documentation will become the responsibility of the dealer. This includes ensuring proper transfer records, fitness certificates, and pollution under control (PUC) compliance.
The registration process for dealers has been made simple and entirely online. Any dealer can register on the national vehicle portal through NIC by paying a one-time fee of ₹25,000.
Officials noted that the lack of registration among dealers has been causing significant revenue losses. Many dealers were previously avoiding tax liabilities, resulting in a loss of 18 per cent GST on profits earned from vehicle resale.
Under the new rules, dealers will now be required to pay GST on the margin earned from each vehicle transaction, ensuring better tax compliance.
Clear Rules for Using Vehicles on Public Roads
While an authorised dealer remains the deemed owner, the vehicle can only be used on public roads for limited purposes. These include providing a test drive to potential buyers, taking the vehicle to a service centre for repairs, or transporting it for fitness and PUC inspections.
Unauthorised use of such vehicles on roads will invite penalties. The MP Transport Department has instructed RTOs to conduct intensive checks to ensure compliance with these restrictions.
Officials said these measures are necessary to prevent misuse of vehicles that are technically in transition between owners.
Strengthening Regulation and Revenue Collection
The new policy reflects the state government’s intent to regulate the second-hand vehicle market more effectively. By enforcing dealer authorisation, ensuring GST compliance, and protecting vehicle owners from legal risks, the Transport Department aims to bring long-term reform to the sector.
Authorities believe the new system will benefit genuine dealers, protect citizens, and increase government revenue while improving road safety and accountability.
Also Read: Delhi-NCR Chokes Under Dense Smog and Fog, Flights Disrupted as Visibility Drops to Near Zero
