Latest Car News in India

Friday, March 16, 2012

By Manoj Kumawat

Budget 2012 for cars: No taxes on diesel cars, excise duty increased

Defying all the speculations regarding the hike in the duty on diesel vehicles, the government of India has maintained the taxes on diesel vehicles same as before in the Union Budget 2012-13. It had long been speculated in the Indian auto industry that the government of India is planning to levy additional taxes on the diesel run passenger vehicles. The proposal of diesel vehicle price has long been doing rounds in the cabinet, but government has decided against execution of this bill.  

Mahindra Xylo Pictures

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However, the excise duties on all size of cars have been increased, which will surely cause a considerable price hike across all models in the coming months. While the basic excise duty has been increased to 12 percent from previous figures of 10 percent, the excise duty on large cars has been increased to 24 percent from 22 percent, earlier. However, the MUV and SUV segment will be most affected from this duty hike as government has increased duties on larger cars to 27 percent. Moreover, the duty on imports of assembled SUVs and MUVs carrying a price tag of over Rs 20 lakh has been increased to 75 percent from 60 percent earlier.

Ford EcoSport Pictures

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A mixed reaction is coming from the carmakers on the government’s latest decisions of not hiking taxes on diesel vehicles and increasing excise duties. While the decision of not increasing the duty on diesel vehicle has been welcomed wholeheartedly, the hike in excise duty is receiving opposition from many. However, this will certainly give car makers clarity over government’s policy on diesel pricing.

Now, it remains to be seen, what impact these decisions of the government will make on the sales of Indian car industry. As per the market speculations, the mass segment car prices are expected to go up by up to Rs 8,000 in the coming months, after the announcement of excise duty hike.

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