Cars May Get Expensive Following the Budget

Car companies expect the price to go up after the Budget owing to the expected hike in the excise duty on cars. The excise duty on cars is expected to go up to 12 percent making small and big cars more expensive leading to a hike in price ranging from Rs. 2000 to up to a lakh. However, small cars like Tata Nano, Maruti Alto and similar models are expected to remain unaffected.

Finance minister Pranab Mukherjee is expected to roll back the 4 percent excise duty cut on cars to again up to 8 percent. This means models with length more than 4 meters and engines more than 1.2L capacity in petrol and 1.5L diesel could get expensive from Rs. 12,000 to up to Rs. 1 lakh.

The government had announced a 4 percent duty cut from 12 percent to 8 percent which had reduced the prices of the cars up to 24 percent. The stimulus package was announced during recession to give boost to auto industry. However, with the current sales scenario improving in past one year, the government is re-thinking on a roll back of 4 percent duty cut.

Apart from the duty hike, auto companies are also worried about the expected tweaking of service tax by one to two percent and hike in Cenvat by 2 percent which would make small cars pricier by Rs. 2000 – Rs. 10000.

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