Radio Frequency Identification (RFID) is an auto identification technology which uses Radio Frequencies (between 30 kHz and 2.5GHz) to identify objects remotely. The automated toll collection system using passive Radio Frequency Identification (RFID) tag emerges as a convincing solution to the manual toll collection method employed at tollgates. Time and efficiency are a matter of priority of present day. In order to overcome the major issues of vehicle congestion and time consumption RFID technology is used. RFID reader fixed at tollgate frame (or even a hand held reader at manual lane, in case RFID tagged vehicle enters manual toll paying lane) reads the tag attached to windshield of vehicle. The object detection sensor in the reader detects the approach of the incoming vehicle’s tag and toll deduction takes place through a prepaid card assigned to the concerned RFID tag that belongs to the owners’ account. This makes tollgate transaction more convenient for the public use. A system which does the job of detecting, billing and accounting for vehicles as they pass through a tollgate using RFID as the identification technology. The system is a great investment in the transport industry. It reduces the common hustles in accounting for the movement of goods from point to point.  An RFID tag is programmed with information in the form of an Electronic Product Code (EPC), which can be read over a considerable distance so that its contents identify the vehicle and enhance a transaction to be undertaken with respect to the specific tag identity taking advantage of radio frequencies ability to travel longer ranges with better data capacities and high speed attained with maximum accuracy.