Car buyers would have to shell out more for their choice of
vehicles, as Finance Minister Pranab Mukherjee proposed to raise the excise
duty on small and large vehicles to its highest level in nearly four years,
while also refraining from laying additional tax on diesel-driven vehicles.
Prices of all cars (compacts and sedans), utility vehicles (sports,
multi-utlity and vans), commercial vehicles and two-wheeler is slated to rise
by a minimum two per cent. The central excise duty has been enhanced by two
percentage points to 12 per cent to 10 per cent.
In addition, there has been a two-way increase in
excise duty on large cars. In keeping with the increase proposed in the
standard rate the duty on such cars have been increased to 24 per cent from 22
per cent.
Presently,
petrol cars longer than four meters having engine capacity above 1,200-cc and
diesel cars longer than four meters with an engine capacity above 1,500-cc
attract excise duty at the rate of 22 per cent, plus Rs 15,000.
Further,
those vehicles, which attracted a tax of 22 per cent plus Rs 15,000, will now
be subject to switching over to an ad valorem rate of 27 per cent, according to
the finance minister's proposal.
The
excise duty on all compact cars (as defined by the government) and two-wheelers
was brought down to eight per cent from 12 per cent and to 20 per cent from 24
per cent on large cars in the first stimulus package of December 2008.
Further,
fully imported large cars, SUVs and MUVs having engine capacity above the
specified capacity with value exceeding $40,000 (about Rs 19.60 lakh) will now
attract a custom duty of 75 per cent as against the current 60 per cent.
As
a result car and SUV making companies like Maruti Suzuki, Hyundai, General
Motors, Honda, among several others are taking a price hike across all their
models. Commercial vehicle and two-wheeler makers like Hero MotoCorp, Bajaj
Auto, Honda Motorcycle are evaluating an increase.
Though
the exact quantum of increase is yet to be finalised by most manufacturers
experts say that it could range between Rs 3,000-Rs 35,000 for cars and SUVs
while that for two-wheelers the hike would mean an increase in the range of Rs
800-2,000. Commercial vehicle could pass an increase of Rs 15,000-35,000.
Pawan
Goenka, president (automotive and farm equipment sectors) Mahindra &
Mahindra said to a television channel, "The hike in duty will surely
impact demand but it will wear off with time".
Imported
cars whose price is double in India
compared to the selling price in their home market will see a further hike by
at least 15 percentage points. Price of models of Aston Martin, Lamborghini,
Jaguar, Porsche, Bentley and Rolls Royce will go up as a result.
Meanwhile,
to provide a competitive edge to home grown bicycle makers, the FM increased
the customs duty on it to 30 per cent from 10 per cent and on bicycle parts
from 10 per cent to 20 per cent.
Also,
commercial vehicle bodies, on which specific rate of Rs 10,000 on chassis and
applicable ad valorem duty is charged will now see a uniform rate of three per
cent.
Specified
parts required for the manufacture of hybrid vehicles enjoy full exemption from
basic customs duty and special CVD with concessional excise duty/ CVD of six 6
per cent This concession is being extended to specified additional items and
lithium ion batteries imported for the manufacture of battery packs for supply
to electric or hybrid vehicle manufacturers.
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