The 2013-2014 Union Budget has arrived and the Indian government has hiked the excise duty on all Sports Utility Vehicles (SUV) by 3 per cent, along with a 100 per cent import duty to be levied on foreign-made luxury cars and bikes. The announcement comes as an electrifying shock to most domestic consumers and the entire automobile industry, because in this year's budget it was expected that the excise on SUVs will be lowered to 22 per cent from the previous 27 per cent. Instead of cutback, the excite duty has been increased further to 30 per cent in the 2013-14 Union Budget.
Informing about the government's stance on excise and import duty cut offs, P. Chidambaram, Finance Minister, Government of India, was quoted as saying, “SUVs occupy greater road and parking space and ought to bear a higher tax. I propose to increase the excise duty on SUVs from 27 per cent to 30 per cent. However, the increase will not apply to SUVs registered as taxis.” Accordingly, the interests of SUV buyers for taxi purposes remain safe as they have been exempted from paying the extra cess while purchasing a new model.
Further, speaking on tax to be levied on imported luxury vehicles during his budgetary declaration in the Parliament, Finance Minister Chidambaram said, “Hence, I propose to increase the duty on such motor vehicles from 75 per cent to 100 per cent.” He also proposed to increase the duty on imported motorcycles from 60 per cent to 75 per cent, with engine displacement of 800 cc or more. Speaking on sales of yachts, he added, “..and on yachts and similar vessels from 10 per cent to 25 per cent.”