The Central Road Fund Act was enacted on December 27, 2000 and enforced with retrospective operation on November 1, 2000 for the purpose of granting statutory recognition to subsisting road funds of the Central Government which is administered by the Resolution formulated by the Central Government in 1988. The intention of the Act is to expand and maintain the national highways and progress the security at railway crossings. For the said purpose, the Central Government plans to impose and collect excise and customs duty on motor spirit generally acknowledged as petrol or high speed diesel oil.

The Central Government shall have power to impose excise and customs duty in the form of cess to fulfill the purposes specified under the Act for the articles listed in the Schedule to the Act that are manufactured in India or imported to India or that has been taken away from a refinery, industrial unit or factory outlet. The Government shall also inflict tax on the articles transferred by any individual to another, which is manufactured or imposed by that person at the rates prescribed in the Schedule. The cess imposed on the article shall be paid by the manufacturer and with regard to the import of the articles, cess shall be inflicted on the imported articles. For the purpose of imposing cess on the items in the Schedule to the Act, the provisions of Central Excise Act, 1944 and the Customs Act, 1962 shall be applicable.

The cess collected under the Act shall be credited from time to time to the Consolidated Fund of India by the Central Government but after subtracting the expenditure of collection and such funds shall be used absolutely for the points provided under the Act. The Central Government shall credit the funds for grants or loans such amount according to law made by the Parliament. In addition, the Central Government is authorized under the Act to constitute Central Road Fund to accomplish the functions provided in the Act by notifying in the Gazette of India. The absolute control over the fund shall vest in the Central government and shall credit any amount of money, any portion of the unspent cess for the purpose of growth and repairs of national highways, funds utilized for the administration and management of the functions under the Act and funds provided for the growth and repair of the State roads.

The funds collected in the form of cess shall be employed for the expansion and repair of national highways, expansion of roads in rural area, expansion of State roads, inter state roads and roads that are economically important, creation of roads near railways in the form of bridge and payment for the projects that may be specified. The departments under the Central Government shall retain appropriate accounts and documents and organize annual accounts statement. It shall also prepare profit and loss account, balance sheet regarding the distribution of shares of fund in the prescribed format as the Central Government may decide under the advice of Comptroller and Auditor General of India.

The fund shall be administered by the Central Government, take decisions relating to investment on the scheme or plans of national highways and express ways, take appropriate measures to increase funds for the expansion and repair of national highways, assign and disburse the amount to the departments entrusted with the expansion of national highways, State roads etc. The Central Government is under a duty to administer and control the funds for the expansion and repair of national highways, organize, complete and proper utilization of the fund, grant approval for the plans for state roads, inter state roads, specify criteria for the carrying out the projects, supervise the projects and provide expenses incurred for such projects etc. The Central Government is empowered under the Act to formulate rules for the effective implementation of the Act.

The Central Road Fund Act, 2000 repealed The Central Road Fund Ordinance, 2000. The parent Act was also amended by enacting The Central Road Fund (Amendment) Act, 2007 and framed The Central Road Fund (State Roads) Rules, 2007.