Union Budget 2019 — The Effect On Automobiles Explained In Brief

The Union Budget 2019 (interim budget) was announced by the Ministry of Finance and it brought some impacts in almost all fields of business. When it comes to the automotive industry, the impact of the Budget is rather indirect. However, the Society of Indian Automobile Manufacturers (SIAM) had some recommendations.

For instance, tax exemptions for an individuals income will indirectly improve his/her ability to purchase an automobile. Here are such positive and negative impacts of the 2019 Union Budget!

The Positives

Income tax exemption upto Rs 5 lakh

The new Budget rules that individuals with a yearly income of upto Rs 5 lakh need not pay taxes. As mentioned at the very beginning, this will indirectly increase the affordability of various commodities including automobiles. In the coming months, we can expect higher demand for commuter bikes/scooters and small cars.

Extension of TDS (Tax Deducted at Source)

The limit of zero TDS was raised to Rs 2.40 lakh from Rs 1.8 lakh. On the other hand, the TDS threshold is now up from Rs 10,000 to Rs 40,000 for bank and post office deposits. This will prove beneficial for taxpayers who keep large sums of money as fixed deposits.

Privileges for Pradhan Mantri Gram Sadak Yojana

With an allocation of Rs 60,000 core for Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA), individuals hailing from rural areas have better opportunities to purchase heavy vehicles or machinery.

The Negatives

No changes to GST (Goods & Service Tax)

The automobile industry was looking forward to having some GST benefits from the Union Budget 2019. However, nothing of that sort happened.

Make In India initiative not mentioned

Make In India initiative would have greatly influenced the Indian automotive industry, but the topic was not discussed in the Union Budget.

No boost on R&D

Major automotive brands are busy shifting to BS-VI-compliant engines and a lot of investment is required for this. However, there is no support from the government to make this shift smooth.

Uncertain EV future

Even though the government has stated its interest to promote electric vehicles in the country multiple times before, there were no formal comments on this in the Budget.


The automotive industry is a bit disappointed with the Union Budget 2019 as it has not brought any major improvements to the current situation. We hope that the government will bring some kind of modifications or policies to make up for this.

Source: ET Auto

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Article Published On: Friday, February 1, 2019, 19:49 [IST]
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