Car buyers in the market for a new vehicle will have to brace themselves for an increase in price with the announcement of upto 5 percent additional tax on passenger vehicles depending on vehicle type.
Finance minister Arun Jaitley proposed an additional infrastructure cess of one percent on petrol, LPG, CNG driven cars having a length of under-four-metres and engine capacity not exceeding 1,200cc, 2.5 percent on diesel cars under-four-metres length and with engine capacity of less than 1,500cc and 4 percent on other higher engine capacity cars, SUVs and larger sedans.
Moreover, 1 percent tax will also be levied on purchase of luxury cars priced more than Rs 10 lakh.
The above move, which comes at a time when the auto sector is grappling with weak demand, is likely to drive up prices of passenger vehicles under-Rs 10 lakh mark by Rs 2,500 to Rs 40,000. The price hike for luxury cars above Rs 10 lakh is set to run into lakhs of rupees.
The finance minister cited the rising level of pollution and traffic congestion for levying additional taxes. Surprisingly, the government has also included CNG and LPG cars under the new taxation policy. Auto industry officials expressed disappointment over the proposed move and said it could be a deterrent to sales and industry growth prospects.
Here is the impact of the proposed move on January’s top 10 selling passenger vehicles:
More on the Union Budget 2016-17
Union Budget 2016-17: Cars and SUVs to get more expensive
Union Budget 2016-17: Auto industry says additional taxes deterrent to growth
Union Budget 2016-17: Auto industry reactions
Uday Singh
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