Union Budget 2016-17: Cars and SUVs to get more expensive

Purchasing a new vehicle in the country is set to get costlier as the government today announced additional taxes on cars and SUVs in the Union Budget 2016-17.

Expressing concern over the rising levels of pollution and traffic situation in the country, Finance Minister Arun Jaitley announced that an additional infrastructure cess would be levied as below;

• 1 percent will be charged on small petrol, LPG, CNG driven cars having a length of below four metres and engine capacity not exceeding 1,200cc
• 2.5 percent will be charged on diesel cars of length not exceeding four metres and with engine capacity of less than 1,500cc
• 4 percent will be charged on other higher engine capacity cars, SUVs and larger sedans

Exempted from the above infrastructure cess are three wheelers, electric, hybrid and hydrogen vehicles. Moreover, motor vehicles registered as a taxi, cars for physically disabled and ambulances are also exempt.

Furthermore, a 1 percent tax will also be levied on purchase of luxury cars priced more than Rs 10 lakh.

Jaitley also announced that amendments would be made in the Motor Vehicles Act to open up the road transport sector in the passenger segment wherein entrepreneurs will be able to operate buses on various routes, subject to certain efficiency and safety norms.

Prices of golf karts are also set to shoot up with a Basic Custom Duty (BCD) increase from 10 to 60 percent.

The Finance Minister said the government has speeded up the process of road construction and proposed to allocate a sum of Rs 55,000 crore in the budget for roads and highways. Apart from the said amount, the road sector will see a further spend of Rs 15,000 crore and the government further expects to approve nearly 10,000km of national highways in 2016-17.

More on the Union Budget 2016-17

Union Budget 2016-17: Higher taxes hit car prices

Union Budget 2016: Auto industry reactions

No additional funds for EV industry in Budget 2016

Budget 2015-16 focuses on improving infrastructure

New car price hike to hit consumers, industry