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Excise Duty On Sedans To Be Revised, Not SUVs
The Union Budget 2013-14, announced in late February was not a welcome one for the Indian automobile industry for one particular reason among several. When the Finance Minister increased the duty to 30 percent for vehicles with a ground clearance more than 170 mm, engine capacity larger than 1500cc and an overall length exceeding 4 metres, he meant to target large SUVs. However, due to the description being unclear, many large sedans ended up getting charged the higher duty.
Naturally, automakers were not pleased and the issue was taken up with the Ministry. ET has now learned from government sources that a new term - two-box vehicles - will introduced to differentiate SUVs from sedans. Sedans, under the new description, will be called three-box vehicles, referring to the front and rear seating area, with the third being the boot area.
If the change is brought about, sedans such as Maruti SX4, Toyota Corolla Altis and Honda Civic, which after the budget have been charged with 30 percent duty, will be back to paying the earlier 24 to 27 percent duty.
The Indian automobile industry is currently going through a rough patch, with sales figures reach new lows every day. The duty revision, if implemented, could bring some relief.
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