Humongous SUVs may escape hike in excise duty!
Sports utility vehicles (SUVs) under Rs 10 lakh may be spared the 3 per cent excise duty hike announced in the Union Budget.
The price cap is being proposed to maintain demand for rural and commercially-focused SUVs such as the Mahindra Bolero, Tata Sumo, Chevrolet Tavera and Force Trax in a slowing economy, and is being considered by the finance ministry on the request of the auto industry and the ministry of heavy industries.
Some urban middle-class SUV choices like the Mahindra Scorpio, Renault Duster (petrol) and the upcoming Ford EcoSport too may escape the duty hike. In his Budget, finance minister P Chidambaram had increased the excise duty on SUVs from 27 per cent to 30 per cent “since they occupy greater road and parking space...”.
While ruling out any roll-back, the finance ministry had asked the auto industry to figure out a way to separate SUVs used by the middle class from premium models.
Following discussions with the auto industry, the heavy industries ministry is likely to revert to the finance ministry on Friday with a proposal to divide SUVs into two categories. Higher duty will apply to the Rs 10-lakh-and-above category. The ministry may also propose riders including height requirements to classify a vehicle as an SUV, while including measures to exclude sedans from the duty hike.
However, sources said the finance ministry may have reservations with the proposal since manufacturers may start reducing prices to avail of lower duty and make that up through higher volumes.
“It is difficult to
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