With signs of the economy recovering and auto sales getting back to the pink of health, the Finance ministry has decided to roll back the excise benefits it was offering to carmakers till now. According to ET, a senior finance ministry official said, the Government would allow interim relief, announced in February and extended once in June, to expire on December 31.
How does it affect you? If you are planning to purchase a small car (read sub 4-metre), the roll back means you pay 12 percent excise instead of 8. For a midsize car, excise duty has gone up to 24 percent from 20 percent. Premium cars will attract 27 percent excise, up from 24 percent and SUVs bear the biggest brunt, back to the original 30 percent from the present 24 percent excise duty.
What that means to you is that every car manufacturer will be forced to increase prices further from the correction in prices they announced a week ago. Compared to December prices, over cost of the cars will go up by 6-8 percent for all cars made in India since most car manufacturers had already announced a price hike in the range of 2-3 percent citing rising input costs.
Cars in the Rs 5-7 lakh range will get costlier by Rs 20,000-30,000 while those around the Rs 10 lakh range will shoot up by about Rs 50,000. The 30 percent excise duty on SUVs will pinch carmakers like Mahindra who depend heavily on them. A top of the line XUV500 for example will get costlier by over Rs 1 lakh.
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