Why do luxury cars have PY registration?

It is done to evade taxes using loopholes in the law.

Registering a luxury car in a state would mean paying anywhere from 28% to 43% as goods and services tax (with cess) based on the model and road tax between 3 and 24% depending on the state. 

In Kerala, the road tax for cars costing above Rs.20 lakh is 20%, whereas in Puducherry it is only 13.75%, claim experts. And that is not all. 

In addition to this, there is registration tax that needs to be paid, it is this tax that is kept to a minimum in Puducherry. So in order to reduce the final amount you pay to get your car on the road, people flock to union territories.

According to reports, high value cars attract almost 15 per cent tax over the purchase value in the states whereas in Union Territories like Puducherry it’s less than one per cent. Why will people pay additional taxes if they can help it? 

Moreover, to register a vehicle in Puducherry one need not have a permanent address there. The Registration Book reportedly features both temporary and permanent address of the vehicle owner. But in the states, vehicles cannot be registered unless the person’s residential address is in the city where the vehicle is to be registered.