Indian Car Blog - Carazoo.com

Well, we all understand the meaning and implications of hikes in excise duties of cars, but what is very difficult to understand is the constant hodgepodge of various taxes that the individual states levy on different cars. In recent years, this has marred the benefits of excise duty cuts that would otherwise be conveniently utilised by the Indian car buyers.

Since 2006, the Union government has brought down the excise duty on small cars from 16 per cent to 10 per cent, though it was raised by 2 per cent in the budget 2010. But various charges including sales tax, road tax, entry tax, registration charges and hypothecation fees by state governments have countered the benefits of excise relaxation and increased the prices of small cars by up to 20,000.

So much so that every time the government cuts excise duties, state governments hike road tax or registration tax. Also, some of the states demand that the buyer pay the registration fee as a lifetime tax upfront.

Carmakers are expecting that the goods and service tax proposed by the government will put an end to tax anomalies across states. . “Industry prefers uniformity in state taxes,” said Society of Indian Automobile Manufacturers (SIAM) president Pawan Goenka.
“There is a huge difference in the local taxes charged by various states on automobiles,” he said, adding that some states charge a lifetime fee while others ask for an annual fee.

In some of the states, while sales tax has risen to 15% from 12.5%, registration fees have gone up to nearly 7-8% from 4%. Car manufacturers and buyers are totally against charges such as entry tax and hypothecation fees. Even the road tax varies across different states and Tamil Nadu, at around 17 per cent, is well ahead of all the other states.

The goods and service tax was likely to be rolled out from this April but differences between the government and states have delayed its rollout. Carmakers, however, are keeping their fingers crossed in the hopes of getting rid of the disastrous effects of variable local taxes.

Uttar Pradesh charges registration fees depending on the curb weight of vehicles, which is spread across three slabs including less than 1,000 kg, 1,000-5,000 kg and over 5,000 kg, attracting fees of 5%, 6% and 7%, respectively.

SIAM has been persuading the government to remove the arbitrary tax slabs introduced by the state governments. But the Union government is reluctant to do so, fearing that the state governments would raise a huge hue and cry about their autonomy.

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Union Budget 2010 has been out there for some time and we have still not recovered from the bitter fact that cars are going to cost more now. Some car manufacturers even went a step ahead and increased prices of their cars even before the budget was read. Talk about beating the competition!

But auto industry analysts have welcomed the Budget saying that it is actually going to benefit the auto industry in the long-run. Another authority which seems mighty pleased with the Union Budget is the Society of Indian Automobile Manufacturers (SIAM).

SIAM has welcomed the Union Budget 2010-11, branding it as a reform focused growth oriented Budget in the background of economic downturn. Dr. Pawan Goenka, President, SIAM and President – Automotive, Mahindra & Mahindra, is quick to point out the positive proposals of the Budget.

He said that the correction in Excise duty on Electric Vehicles will enable the manufacturers take CENVAT credit and exemption of Customs duty on Electric Vehicles parts. Dr Goenka also welcomed the increase in weighted deduction for in-house R&D to 200% from 150% and outsourced R&D from 125% to 175%.

So it means that electric vehicles will cost lesser now. All that sounds good. But considering that electric vehicles are not much popular among the Indian customers, relaxation in customs duty on electric vehicles certainly does not bring any kind of joy to us.

Dr. Goenka also said that 2% hike in Excise duty was expected and should not have adverse impact on the market. That’s about the market but what about the people on whom the auto manufacturers have already passed on the cost burden.

So what if you have to pay more to purchase the vehicle that you have always wanted to, it does not wreak havoc in anyone’s life – definitely not SIAM’s, at least.

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This is a good piece of information for us and especially for the environmentalists. We see a bright future for hybrid cars in India.

The first reason is hybrid cars are going to cost less! Isn’t that great?

The Indian Government on Monday announced a proposed lower the import duty on car. Moreover, the Indian Government wants to encourage the use of environment-friendly vehicles and thus should lower import duty. Therefore, the prices of hybrid cars will certainly come down.

The Minister for Heavy Industries and Public Enterprises, Mr. Vilasrao Deshmukh, said that he has to convey this to the finance ministry. Hence, things like ‘how it should be done and how much’ are still on the process. The Minister feels that some concession is needed to be offered on hybrid models to encourage the adoption of eco-friendly vehicles.

At present, full hybrid technology is offered only by foreign automakers, but many of them are reluctant to bring in their vehicles as over 100 per cent import duty makes their prices prohibitive and difficult for a mass-scale adoption. We can cite Honda’s bad experience which had launched a hybrid version of its Civic sedan in India with near-double cost of the car (against a regular India-made petrol model). Honda suffered a poor demand for the hybrid version and this compelled the company to give a discount of as much as Rs 8 Lakh to clear the stocks.

Moreover, the Ministry of Environment and Forests announced to revise national ambient air quality standards. The revision came after 15 years and is in line with the latest advancement in technology and research and is at par with global best practices.

Although the standards are tighter now there is still an urgent need for controlling the increasing numbers and dieselization of car fleets. Diesel vehicles are known to be bigger polluters as they emit higher smoke, particles and Nitrogen Oxide (NOx).

In Delhi over 1000 new cars or personal vehicles hit the road every day. According to Society for Indian Automobile Manufacturers (SIAM, market share of diesel cars is expected to be 50 percent of total car sales by 2010.

At this point, we can say that hybrid cars are coming to the rescue of the environment with their zero emission technology to keep the planet greener.Furthermore, all cars will carry fuel efficiency tags from 2011. This is another good news for the GenX who have a sense of duty towards Mother Earth.

The government has finally given the final touches to a notification setting fuel efficiency standards for the automobile sector. The norms will come into force in 2011 and the energy efficiency tags will be certified by the Bureau of Energy Efficiency.

At present, automakers voluntarily disclose fuel efficiency at the point of purchase, but the disclosure is optional. Once the notification is in place, revealing efficiency details will become mandatory.

All these steps taken by the Indian Government show a green light to hybrid cars coming to India!

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