Union Budget 2016-17: Higher taxes hit car prices

Here's an overview of how the additional cess impacts the top 10 selling passenger vehicles.

Published On Mar 01, 2016 04:45:00 PM

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Union Budget 2016-17: Higher taxes hit car prices

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:

Impact of additional taxes on top 10 cars
Top 10 January	Prices (ex-showroom, Delhi)	Additional Tax	Price Increase
Maruti Alto	Rs 2,58,312 - 4,11,609	1-2.5%	Rs 2,583 - 10,290
Maruti Dzire	Rs 5,23,000 - 8,39,743	1-2.5%	Rs 5,230 - 20,993
Maruti Swift	Rs 4,73,844 - 5,34,241	1-2.5%	Rs 4,738 - 13,356
Wagon R(including Stingray)	Rs 3,76,405 - 5,34,241	1-2.5%	Rs 3,764 - 13,356
Hyundai Grand i10	Rs 4,84,095 - 6,85,054	1-2.5%	Rs 4,841 - 17,126
Hyundai i20	Rs 5,49,350 - 8,60,898	1-2.5%	Rs 5,493 - 21,522
Honda City	Rs 7,77,800 - 12,00,300	4% - (4+1%)	Rs 31,112 - 60,015
Maruti Baleno	Rs 5,11,000 - 8,16,000	1-2.5%	Rs 5,110 - 20,400
Maruti Celerio	Rs 3,99,807 - 5,77,899	1-2.5%	Rs 3,998 - 14,447
Hyundai Creta	Rs 8,87,337 - 13,98,031	4% - (4+1%)	Rs 35,493 - 69,901