The government of India is planning to de-classify the rural segment vehicles from the high tax segment vehicles. The move will be taken in a bid to offer vehicles such as tractors and other farm equipment to rural users at a competitive price. At a time when the new car prices are rising by leaps and bounds, a relief in excise duty on rural utility vehicles will certainly bring some smile on the faces of customers of this segment.
According to a statement given by a senior official of the ministry of heavy industry, "There is a consensus to subsidize some specific vehicles that have a mass market in rural areas. We have been looking at options to de-classify these from other vehicles that are in highest tax net so that rural users can enjoy competitive prices like tractors and other farm equipments."
Government had decreased the excise duty on small cars, which include vehicles under four metres and 1,200cc petrol and 1,500 cc diesel engines, in the budget of year 2006-07 from 24% to 16%. The Heavy Industry Ministry, which is the nodal ministry for the automobile industry, has now taken an initiative that vehicles,
which target different sections of society, should not be charged same.
"These utility vehicles mostly are under 10 lakh and cater to a wider mass of customers and have multiple commercial applications. Many of these also have direct application in agriculture, which is critical for the sustenance of the rural economy but these vehicles pay higher excise (22%) along with additional 15,000 tax levied on luxury cars," the official said.
