Vehicle identification and classification are some of the major tasks in the areas of toll management and traffic management, where these smart transportation systems are implemented by integrating various information communication technologies and multiple types of hardware. The currently shifting era toward artificial intelligence has also motivated the implementation of vehicle identification and classification using AI-based techniques, such as machine learning, artificial neural network and deep learning. In this research, we used the deep learning YOLOv3 algorithm and trained it on a custom dataset of vehicles that included different vehicle classes as per the Indian Government’s recommendation to implement the automatic vehicle identification and classification for use in the toll management system deployed at toll plazas. For faster processing of the test videos, the frames were saved at a certain interval and then the saved frames were passed through the algorithm. Apart from toll plazas, we also tested the algorithm for vehicle identification and classification on highways and urban areas. Implementing automatic vehicle identification and classification using traditional techniques is a highly proprietary endeavor. Since YOLOv3 is an open-standard-based algorithm, it paves the way to developing sustainable solutions in the area of smart transportation.