Budget 2016: Additonal 1% Tax to be Levied on Cars Over Rs. 10 lacs

As we are instantaneously bringing to you exclusive updates for the 2016 Union budget, we have learned that prices for all cars, which are priced over Rs.10 lacs will be increased by 1%. This includes the likes of some of the most popular names in the industry, like the Renault Duster, Tata Safari Storme, Mahindra XUV500 and many others. This might not seem as an substantial increase in the overall cost, as the price hike roughly translates into an increase of Rs. 10,000 for cars featuring a price tag of Rs 10 lacs, but regardless it is not a good note on which the budget was kicked off on.

Speaking of SUVs, sadness continues as SUVs and high capacity cars face what the government calls a high capacity tax, which stands at 4% of the overall cost of the car. Also, adding to our misery is the 1% infra cess which will be applied all across the petrol, LPG and CNG cars. If you are glad about the fact that small car and in particular, small diesel cars have been spared from escalation of prices, then our deepest condolences. You see, the government has decided to apply a 2.5% infra cess on small diesel cars, as well.

There is however, a silver lining to this dark cloud, there has been no word on the excise duties and I know what you must be thinking- How is it a good if the government didn’t decrease excise duties? Well, think of it this way, the way the 2016 budget turned out, possibility is stronger that they could have just gone ahead and increased the excise duties.

Adding to this, the government has also allocated 2.18 lakh crores to Roads & Rails for FY16-17. Out of which Rs. 97,000 crore will be invested in roads and highways. This in particular is a very good news, as 2015 saw highest number of motor vehicle production and road construction. Speaking of the road projects, 85% of stalled projects will be put back on track. The government will also be converting 2,000 kilometres of state highways into national highways.


Budget 2016: Additonal 1% Tax to be Levied on Cars Over Rs. 10 lacs