The 2012 Budget & the Indian Car Scene : All you need to know

[kaiserketkar]

It's my view that the govt has done a very shrewd thing.
Rumour mills stated that it was planning on a variable diesel tax upto 80k [less for smaller hatches/sedans, more for premium cars/ suvs.
Inspite of running into some resistance from Auto Cos on the tax, it might have still achieved equivalent recovery.

An excise hike of 5% on >1.5l engines will pretty much allow it to acheive it's stated objective. All the SUVs that it originally wanted to tax are in this bracket. So are the 10lac+ sedans, of which a large chunk sold are diesel.
Yes, the by-product may be that petrol cars also end up getting taxed, which actually increases the govt's kitty even more.

So the auto industry which was so against the diesel tax, doesn't still have anything to rejoice, because now all cars across the spectrum are costlier, and that creates further problems for their customers, and effectively for them as well!

[vasoo]

In today's state budget, Kerala government has introduced variable rates for registration charges based on car price bracket. Cars costing more than 15 lacs will be charged at 15% rate, which brings it closer to rates charged in Karnataka . i am sure this will create a stampede for booking high end cars in the next two weeks.

The new rates for ex-showroom prices are..
Up to 5 lacs: 6%
5 to 10 lacs: 8%
10 to 15 lacs: 10%
15 and above: 15%

[vinit.merchant]

Originally Posted by vinair

What justification do these folks have?? Are they real bothered about other road users? What wrong if taxes are increased on these vehicles? In my opinion taxes should be made even more stricter on bigger vehicles that are registered for personal use.

Just look at it from their POV. Today we have limited income and parking space. So you buy a vehicle that meets all your needs. Most MPV owners buy it as their only car in the house. With the above limitations, can we buy separate vehicles for each purpose?

[Ricci]

Originally Posted by vinair

I see many people in my office driving down in a Xylo or an Innova with just them inside!! I mean a seven/eight seater vehicle for just one person??? isn't that ridiculous??

OK, so if you have a large family and need to travel often, but can only buy 1 car, what do you do ? A small car that suits single person commute to office won't fit a family of six, and if you can only buy car ( for money or parking space reasons ), what does one do ? Not everyone can afford multiple cars, and a two wheeler may not be advisable for people with spinal problems. Moreover, monsoons can be a bother on two wheels ! So far I haven't had long commutes, so managed on the bike even in rains , but I'd rather have a car at least in the monsoons. Yes - company bus is there, but if your work requires flexible timings as often is in IT ?

[getsurya]

Hi,

I feel that Govt is out and out to protect the Indian Auto manufacturers to make more moolah! Rather than encouraging quality imports from better car makers into India, every budget only sees an increase in the import taxation which is non-sense. As, once we the foriegn car makers see the volume sales going up the actual product prices will get normalized over a period of time. We are not allowing that advantage to set in!

[Marlon]

Good Information on today's TOI,

http://timesofindia.indiatimes.com/b...w/12336305.cms

As per the article the price is only for the cars that are dispatched from the Manufacturer after March 16. The cars with old VIN number are still to be sold at pre-budget prices but dealers may not do so.

"Starting from March 16 (Budget day), as we send vehicles, it will be with a new price tag. But what the dealers do with the existing stock is up to them. Technically, existing stock should be sold at the older price, but it's the dealer's prerogative," said Pawan Goenka, president (auto and tractor division), M&M.

[manojmis]

Originally Posted by vasoo

The new rates for ex-showroom prices are..
Up to 5 lacs: 6%
5 to 10 lacs: 8%
10 to 15 lacs: 10%
15 and above: 15%

Can you please share the older existing rates, i mean, the pre budget ones.

[vasoo]

Originally Posted by manojmis

Can you please share the older existing rates, i mean, the pre budget ones.

It was 6% of invoice amount irrespective of the range. So that means a significant increase for cars worth 15 lacs or more. For example a 20 lac car will now pay 3 lacs instead of 1.2 lacs earlier.

[RGK]

Thanks GTO for the relevant info.

Govt needs money from all channels and Auto industry is one of the target.
Feel the respective state govts will also add few taxes which will burden the buyers again.

[sammycoolster]

Well. I do understand about higher taxation for higher earners. But trust me anyone in IT or any other industry who earns in the range of 15-30 lakhs a year is definitely working a lot harder.

I don't think taxing them so heavily where almost a good part of their salary goes as tax is being very constructive.

Imagine this if an IT guy who is well paid saves 1 lakh a month, in his 25 years of career the max he is going to make is only some 6 or 7 crores, which with the rate of inflation we are having in our economy, will be peanuts in no time.

So net result is the govt is always bent on taxing the middle class, and this is the same govt which said someone who could spend Rs 32 a day is not below the poverty line.

I sometimes wonder where all the brainy folks who clear IAS go to.

The only grouse I have is for all the tax that I pay, I dont get anything in return, I am open to debate on that. When I state that, I mean if I pay 1 rupee as tax i want atleast 60 ps as a return in form of facilities etc.

No wonder people who relocate out of India even dread to think of stepping back in..

[Ricci]

Originally Posted by sammycoolster

But trust me anyone in IT or any other industry who earns in the range of 15-30 lakhs a year is definitely working a lot harder.

So net result is the govt is always bent on taxing the middle class, and this is the same govt which said someone who could spend Rs 32 a day is not below the poverty line.

We're going OT here, but I don't think the average IT guy makes anywhere close to 30 lac , 15 lac may be, at 8-10 year experience level on the cusp of becoming a manager. 30 lac is middle management territory, and I think most industries pay around that much for middle management.

And the poverty line just got redefined - now it's Rs 28 a day !!!
I wonder which decade's price list the babu's have in mind when deciding the poverty limit - maybe 1970s ?

[sammycoolster]

Originally Posted by Ricci

We're going OT here, but I don't think the average IT guy makes anywhere close to 30 lac , 15 lac may be, at 8-10 year experience level on the cusp of becoming a manager. 30 lac is middle management territory, and I think most industries pay around that much for middle management.

And the poverty line just got redefined - now it's Rs 28 a day !!!
I wonder which decade's price list the babu's have in mind when deciding the poverty limit - maybe 1970s ?

Yes, I know I was offtopic but it was adding some fuel to the fire, so wanted to mention it. Sorry though.

Yeah I think our IAS officers lose their brain by the time they become IAS, because of the hard study they had to do.

This country is run by such people and its so sad to see it, and I am telling this inspite of having many close friends as babus.

[teamveevee]

Originally Posted by kaiserketkar

It's my view that the govt has done a very shrewd thing.

I agree. Those who buys > 15L, should not worry about an additional 1 L tax increase. For the middle class, there are many choices below 15L, so should not affect them much. Hopefully there will be more choices in the future in this segment. All manufactures will be forced to come out with smaller SUVs. The multinationals with small SUV in their kitty may benefit, but they may not have an egine less than 1500 cc.
But would like to see the Diesel subsidy removed one day.

[S.MJet]

Originally Posted by anjan_c2007

But there is a recategorisation now that puts the 1.6 L sedans like the old Ford Fiesta, Hyundai Verna ,VW Vento, Skoda Rapid & Maruti SX4 (petrol) fall in the 27% excise bracket. Sedans like the Honda City & new Ford Fiesta with 1.5L engines get the excise advantage.

Did a small calculation for large cars (new excise @27%)
IMHO there will be no impact on Vento/Verna/SX4/Rapid sales. The new ex-showroom difference is only 7K to 20K on a 7L–10L Ex-showroom price. Manufactures can easily tweak their offers to manage this difference.

Pre Budget
Ex Showroom: 700000 1000000
Ex VAT@12.5%: 622222 888889
Ex Excise+Fixed Duty: 495018 713597
Post Budget
Ex VAT (Excise@27%): 628673 906269
Ex Showroom: 707257 1019552
Difference: 7257 19552

[GTO]

Note the difference in pre & post Budget prices. The Civic's over 1.5 liters and thats exactly where the excise increase is brutal!