New cars in India are become more expensive as the Finance Minster Arun Jaitley announced new taxes, from entry level to luxury cars. According the new budget 2016, the Minister announced 1% infrastructure cess on all the small petrol, CNG and LPG cars of length not exceeding 4-metre with an engine capacity below 1200cc. And taxes on the sub-4 metre diesel cars with engines not exceeding 1500cc will be additional 2.5 per cent, while the bigger sedans, MPVs and SUVs have been pay an additional 4 per cent high capacity tax. Also above Rs 10 lakh cars will be charged an additional 1 per cent “luxury tax”.
Highlights of Budget 2016 new taxes on cars:
- 1 percent infra cess on small petrol/LPG/CNG cars of length not exceeding 4-metre with an engine capacity below 1200cc
- Additional 2.5 % tax on sub-4 metre diesel cars with engine not exceeding 1500cc
- 1 percent luxury tax on all the cars above Rs 10 lakh
- 4 percent tax on bigger sedans, MPVs and SUVs with higher engine capacity
- The tax is applicable to all vehicles above this price tag both cars manufactured here and CBUs
Hyundai will hike price of its entry level Eon by Rs. 3,000, Grand i10 by Rs. 5,000, Elite i20 by Rs. 18,000, and Creta will be expensive by Rs. 26,000once once the cess is effective.
The concern about a weakening demand was seen in the sharp decline in the stock price of Maruti Suzuki, the country’s largest car maker. The stock touched a 14-month low at BSE and closed at Rs 3,242, down 4.88% over the previous day. The company’s market cap also fell below the Rs 1,00,000 crore mark after many months. Stock price of Tata Motors fell about 1.5% to Rs 297. M&M’s stock price, however, was in green and up almost 1% at Rs 1,241.
2016 New Budget will have an impact on the price of the cars and may also impact overall demand and bigger vehicles will have negative impact especially on bigger passenger vehicles. The Indian automobile Industry sees the allocation of Rs 97,000 crore on infrastructure for roads & highways as a positive move. The government also announced Rs 55,000 crore for roads & highway and a total of Rs 97,000 crore for new roads.
In December last year, The Supreme Court had banned the registration of diesel vehicles over 2000cc in Delhi till March 31, 2016.