Budget 2013: Luxury cars may lose their shine

Mar 01, 2013, 09:35 IST | Shashank Rao

Thanks to a hike in import and excise duties, high-end cars and SUVs are likely to cost more

Buying a high-end car or a sports utility vehicle (SUV) will become a costlier affair for Mumbaikars, as Finance Minister P Chidambaram has hiked the duties and taxes on such automobiles.

Highlights of Budget 2013-14

A Ferrari is the cynosure of all eyes at an auto show. Representation pic

The import duty on luxury vehicles has gone up from 75 per cent to 100 per cent, while the excise duty on SUVs has been upped from 27 per cent to 30 per cent, on motorcycles with engine capacity of 800cc or more it has risen from 60 per cent to 75 per cent, and on yachts and similar vessels, from 10 per cent to 25 per cent.

“There is an affluent class in India that consumes imported luxury goods such as high-end motor vehicles, motorcycles, yachts and similar vessels,” said Chidambaram in his budget speech. Transport experts in the city are interpreting this announcement in different ways. “There is a recognition that imported cars and SUVs utilise more fuel and occupy more space on road and they are being purchased as status symbols.

This (the hike in duties) could discourage those buying such automobiles,” said Ashok Datar, transport expert, Mumbai Environmental Social Network. RTO officials, meanwhile, hope that the earnings from the increased duties will result in a hike in their revenue.

Others meanwhile feel that the select few who actually buy such high-end vehicles wouldn’t mind a selective hike of a few thousand rupees. “This marginal hike would hardly matter and there wouldn’t be a significant shift to public transport. The government should have also targeted the lower-end vehicles if they wanted to curb growth in vehicle population,” said AV Shenoy, transportation expert.

Anand Mahindra
From Twitter

Anand Mahindra: ‘Space occupied’ was the reason to tax SUVs. And yet larger, more luxurious sedans are exempt. Neither an equitable nor an inclusive rule. No quarrel if ALL large cars taxed. Singling out SUVs destroys a level field. Sad, one has to fight harder to succeed in one’s own country. 

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