Budget 2016: Tax on bigger cars applicable to all fuel types: Trade group

By: | Published: March 10, 2016 5:30 AM

Finance Minister Arun Jaitley's Budget 2016 plan to levy an additional tax of 4 percent on large cars will apply irrespective of the fuel used, the country's auto industry body said. Jaitley has imposed a 'green' tax on passenger vehicles, effective immediately, aimed at helping fight high levels of air pollution and congestion.

Finance Minister Arun Jaitley’s Budget 2016 plan to levy an additional tax of 4 percent on large cars will apply irrespective of the fuel used, the country’s auto industry body said. Jaitley has imposed a ‘green’ tax on passenger vehicles, effective immediately, aimed at helping fight high levels of air pollution and congestion.

The budget document, however, did not specify if the highest tax of 4 percent would be applicable on vehicles running on a specific fuel or all transportation fuels.

“I propose to levy an infrastructure cess of 1 percent on small petrol, LPG (liquefied petroleum gas), CNG (compressed natural gas) cars, 2.5 percent on diesel cars of certain capacity and 4 percent on other higher engine capacity vehicles and SUVs,” Jaitley said.

Industry lobby Society of Indian Automobile Manufacturers (SIAM) said that the higher tax would apply to all cars and sport-utility vehicles longer than four meters in length and with engine capacity of more than 1200cc for petrol cars and higher than 1500cc for diesel.

The new tax has come as a “rude surprise” for the auto industry, said Sugato Sen, deputy director general at SIAM.

According to the budget document, three-wheelers, electric and hybrid cars and vehicles running on fuel cell technology are exempt from the new tax. Vehicles registered as taxis and ambulances, and those used by physically handicapped persons are also exempt.

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