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Diesel Cars Set At Get 10 Percent Additional Tax
The announcement of the new tax on diesel cars is expected to be announced at the forthcoming budget. According to sources, the plans to impose this tax on diesel cars has already got approval from the finance ministry. This will mean bad news for both people who are planning to buy a diesel car as well as carmakers who have invested heavily in diesel car technology.
Diesel cars have seen a huge increase in demand in the past two years. The central government is of the opinion that passenger cars are increasingly consuming subsidized diesel which was causing losses to oil companies. This one time tax of ten per cent of the car's price will be used to help these oil companies.
The Society of Indian Automobile Manufacturers (SIAM) had earlier said that demand for diesel cars had increased by 24 per cent last year. In fact some car models that have both petrol and diesel variants have seen demand for diesel cars increase by a mammoth 80 per cent.
According to sources, this new tax on diesel cars will be higher on SUVs that consume more diesel per kilometer. Some state governments have already imposed such a tax on diesel cars. If the central government also imposes its own tax then, diesel cars will be more expensive. They are already more expensive that petrol versions and yet people are buying them due to their improved fuel economy.
But if the price of a diesel car increases further, people might revert back to petrol cars. This will be a dangerous situation for several carmakers who have invested heavily in expanding production of diesel cars. Some carmakers are waiting for clear government policy on diesel pricing before taking a decision.
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