Disclaimer: Education only. All numbers in examples are hypothetical. Figures are as of the date shown at the end of the page.

In simple words (if you are in class 10)

Toll money is like the money a school canteen makes:

Money = number of customers × price each pays.

On a toll road, "customers" are vehicles, and the price depends on the vehicle type: a car pays least, a bus or truck more, a big multi-axle truck the most (because heavy vehicles damage the road more). Every year on 1 April the toll price is revised using an inflation index, a bit like a school raising canteen prices when food costs rise.

But a road also has costs. Every few years the top layer of the road wears out and has to be relaid. That is a big one-time bill called major maintenance, like repainting your whole house every 5 years.

The professional view

Car, jeep, van: 8LCV: 2.4Bus, 2-axle truck: 6.83-axle: 4.444 to 6 axle: 9.547+ axle: 1.95₹33.1 lakhper day, hypothetical
  • Car/jeep/van
  • LCV
  • Bus/2-axle
  • 3-axle
  • 4–6 axle
  • 7+ axle
Where toll revenue comes from (hypothetical plaza)Commercial vehicles are about 46% of traffic but about 76% of revenue in this example.

1. The revenue equation

Toll revenue (year t) = Σ over vehicle classes [ Average daily traffic (ADT) × effective toll rate × days ]
                        − leakage − exempt traffic − discounts (local / monthly / annual passes)

Vehicle categories and base rates are set under the National Highways Fee (Determination of Rates and Collection) Rules, 2008 and the notification for each fee plaza.

Illustrative revenue build (hypothetical plaza):

Class ADT (vehicles/day) Single-trip fee (₹) Daily revenue (₹)
Car / jeep / van 8,000 100 8,00,000
LCV 1,500 160 2,40,000
Bus / 2-axle truck 2,000 340 6,80,000
3-axle commercial 1,200 370 4,44,000
4–6 axle / HCM / EME 1,800 530 9,54,000
7+ axle (oversized) 300 650 1,95,000
Total 14,800 33,13,000

Annualised, about ₹121 crore before passes, exemptions and leakage. Notice that commercial vehicles are about 46% of traffic here but about 76% of revenue. That is why freight cycles (industrial output, mining, ports) matter more for many highways than car traffic.

2. Annual toll revision

  • Fees are revised every year from 1 April, linked to the Wholesale Price Index. The Rules restrict the WPI-linked part of the increase to 40% of the rise in WPI (Construction World; MoRTH GSR 26(E), 16 Jan 2014).
  • On top of that, rule 5(1) raises base rates by a fixed 3% a year (without compounding) from 1 April 2008 (Fee Rules text on Indian Kanoon). Fees are rounded to the nearest ₹5.
  • Other rules worth knowing: for publicly funded projects, once capital cost is recovered the fee drops to 40% of the user fee (rule 6(6)(b)), and a second plaza in the same direction on the same section generally cannot be within 60 km (rule 8(2)), subject to exceptions.
  • The ministry applies a linking factor (1.641) to bridge the old 2004-05 WPI base to the 2011-12 series (Construction World, above).
  • Implication: in a low-inflation year, toll growth comes mostly from the fixed component and traffic; in a high-inflation year, tolls lag cost inflation because only 40% of WPI passes through. Model this explicitly.

3. Collection technology

  • FASTag (RFID) became mandatory at national highway plazas from midnight of 15/16 February 2021; vehicles without a valid FASTag pay double the fee (Indian Infrastructure).
  • GNSS-based tolling: a September 2024 amendment to the Fee Rules provides dedicated lanes for vehicles with a GNSS on-board unit, a double fee for using those lanes without a working unit, and no fee for the first 20 km each direction per day for vehicles without a National Permit (News On AIR, 10 Sep 2024).
  • FASTag annual pass: from 15 August 2025, private non-commercial cars, jeeps and vans can pay ₹3,000 (₹3,075 from 1 April 2026) for one year or 200 trips, whichever comes first (Outlook Business; NBM&CW). Concessionaires are compensated weekly under an NHAI SOP of 17 October 2025, as a change in law for projects bid before 17 June 2025 (Fox Mandal). See Toll fee rules, FASTag and GNSS.
  • Why it matters for valuation: distance-based tolling changes the revenue base from "plaza crossings" to "kilometres travelled". Any change in law that reduces revenue needs a look at the concession's change-in-law and compensation clauses.

4. What drives traffic

Driver Direction Notes
GDP and industrial growth + Traffic studies use an elasticity of traffic to GDP or sector output
New industrial corridors, ports, mines + Can create step changes
Competing roads, expressways, rail freight corridors − The MCA protects against some competing roads; check the clause
Toll rate increases − (small) Toll diversion to free alternative roads
Exemptions and local passes − Exempt categories and local-user discounts
Overloading enforcement ± Higher fees for overloaded trucks; enforcement varies
Fuel prices, EV adoption ± Indirect

Practitioners usually split traffic into normal growth, generated traffic, and diverted traffic, and stress-test each.

5. The concession: rights, limits and end of life

  • A concession gives the right to collect toll for a defined period (BOT and TOT); at the end, the road is handed back meeting hand-back requirements.
  • Under the March 2024 BOT MCA changes, the concession period can be extended if NHAI builds an additional tollway or a competing road in breach (see Part 5; JSA).
  • Remaining concession life is the single biggest driver of value per rupee of current revenue. A road with 8 years left is worth far less than one with 22 years left at the same toll today.

6. Major maintenance (MM)

  • Routine maintenance: pothole repair, signage, lighting, every year.
  • Periodic / major maintenance: a bituminous overlay or renewal at intervals set by the pavement design, traffic loading and the concession's maintenance standards (often several years apart; always project-specific); structural repairs to bridges; occasional full reconstruction.
  • Why it is critical: MM is lumpy. A year with an overlay can wipe out much of that year's free cash flow. Lenders require a Major Maintenance Reserve Account (MMRA) funded ahead of time; rating agencies view it positively (CARE HAM methodology).
  • InvIT angle: SEBI's February 2026 consultation proposed allowing InvITs with 49–70% leverage to borrow for non-routine major maintenance of road projects, which recognises how lumpy MM is (Vinod Kothari).
  • Accounting angle: under the intangible-asset model, contractual resurfacing obligations are provided for under Ind AS 37 (see Part 8).

7. KPIs a toll-road MIS should track

  • ADT by class vs traffic study and vs last year; PCU-weighted traffic
  • Revenue per vehicle and per km; share of commercial vehicles
  • FASTag / electronic share, leakage and exemption share
  • Toll collection days lost (agitations, force majeure)
  • O&M cost per lane-km; MM spend vs plan; pavement roughness (IRI) and NSV survey results
  • Penalties and damages under the concession agreement
  • DSCR and reserve balances (see Part 9)

A ready-made layout is in the Toll revenue and traffic MIS template.

Sources

  • National Highways Fee Rules, 2008 (text): linked above
  • MoRTH GSR 26(E) dated 16 January 2014: linked above
  • News On AIR on GNSS rules (Sep 2024): linked above
  • CARE Ratings HAM methodology; JSA on MCA; Vinod Kothari on SEBI consultation: linked above

Previous: Part 5 · Next: Part 7: Valuation and NDCF

Education only. This page is not investment, tax, legal or accounting advice, and it does not recommend buying, selling or holding any security. Laws and rules change: check the linked primary source and consult a qualified professional before acting.

Last reviewed 25 October 2026. Spotted an error? Tell us and we will correct it.