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Punjab Announces Vehicle Tax Hike, Affects Prices Ahead Of Festive Season
The Punjab state government has increased the motor vehicle tax on passenger cars and two-wheelers, making them pricier. The tax hike ranges from 0.5 to 1 per cent and applies to the actual cost of the vehicle. This increase comes just before the festive season, a peak period for auto sales in India.
According to a notification from the Department of Transport, Punjab, the motor vehicle tax on passenger vehicles costing up to ₹15 lakh has risen from 9 to 9.5 per cent. This change means an additional ₹7,000 to ₹20,000 in taxes for these cars. For vehicles priced between ₹15 lakh and ₹25 lakh, the tax has increased from 11 to 12 per cent.
New Motor Vehicle Tax on Two-Wheelers
For two-wheelers, models costing up to ₹1 lakh will now attract a tax of 7.5 per cent, up from the previous 7 per cent. Those priced between ₹1 lakh and ₹2 lakh will see a tax increase to 10 per cent. A new category for premium two-wheelers costing over ₹2 lakh has been introduced with an 11 per cent tax rate.
The Transport Department has also added a new category for vehicles costing above ₹25 lakh, which will now be taxed at 13 per cent. This adjustment is expected to make premium mass-market cars significantly more expensive, particularly compact SUVs priced between ₹15 lakh and ₹25 lakh.
Impact on Vehicle Prices
The new taxes are effective immediately and are likely to impact the prices of premium motorcycles in the 350-500 cc range. The state government aims to boost revenue through these additional taxes on new vehicle sales.
This announcement comes amid a slowdown in retail sales in the market, leading automakers to adjust production due to low demand. It remains uncertain how this tax hike will influence car sales in Punjab in the short term.
The government has introduced new tax rates to increase revenue from vehicle sales, coming at a time when automakers are already struggling with lower consumer demand. Typically, the festive season boosts auto sales across different categories due to its auspicious influence. However, the timing of this tax increase might impact consumer choices during this crucial period for the auto industry.
The price increase for four-wheelers and two-wheelers is expected to have varying impacts across different segments of the market. Premium mass-market cars and motorcycles are likely to see significant price hikes due to these new taxes.
Overall, while the state government aims for higher revenue through this move, it remains to be seen how it will affect consumer behaviour and auto sales in Punjab during this festive season.
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