Team-BHP - Excise Duty Hike expected in February 2011?

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Today's TOI has a report that the auto industry expects a hike in excise duty this month.

Car and bike prices likely to go up again - The Times of India

Inviting the forum to comment on this & hope this discussion can be useful for Team-bhpians who might be looking at a new set of wheels.

Good day!

It will surely go up and I'm also expecting an addl duty for Diesel Cars inline with the recommendations of the Kirit Parikh committee.

Excerpts from that report below

Excise Duty Hike expected in February 2011?-diesel.jpg

I think a 2% hike (at least) is almost certain - given Govt's budget deficit is higher than target and the way auto sales are at record levels. It could certainly be higher than 2% as well.

@lloydofcochin - higher excise on diesel vehicles could also be an option - but i am sure the auto industry would lobby hard to avoid it - else, it could be very detrimental to diesel vehicle sales

Yes , I read this article in TOI this morning and am not surprised at all. With the price of everything in general going up, it has to impact the auto industry as well. This trend will continue till we stabilization on other prices (Read: Inflation).

Also, as someone points out in the article, the increase has to be passed to the customer and cannot be borne by the industry.

Just heard that VAT in Karnataka will be raised from 13.5% to 14% in today's budget.
Can the experts tell us whether it will be effective from today or any specific dates?

So it there is an excise hike coming in on 28th Feb, then its double jolt for people in Karnataka.

2% hike is almost a non-issue. Rahul Bajaj said as much yesterday on NDTV Profit. With aa buoyant auto industry he reckons it is almost a given.

Let us hope GST comes in next year, leading to some rationalisation in sales tax etc.

Excise duty change impacts the car price when it leaves the factory - so if your car is produced after the change then its ex-showroom price would vary.

On the contrary, state VAT is paid during registration. Any change in VAT starts on 1st April

(1) If you get a car manufactured on 25th Feb, and register it by 31st March, then OLD excise duty and OLD VAT.

(2) If your car is manufactured on 1st March and you register it on by 31st March, then NEW excise duty, but OLD VAT

(3) If you get a car manufactured on 25th Feb, and register it on 1st April, then OLD excise duty, but NEW VAT.

(3) If your car is manufactured on 1st March and you register it on 1st April, then NEW excise duty, and NEW OLD VAT

Hope this clarifies :)

Quote:

Originally Posted by bimi (Post 2256351)

@bimi

So i guess its official, just got some info on it and dealers confirmed that the 2% rise will have to be born by the customer!

Maruti says that in no way can they bear the additional 2% duty as competition is growing.

Quote:

Excise Duty On Diesel Cars To Increase

The Indian automotive market has seen plummeting sales performance this year is largely attributed to the rising fuel prices and simultaneously increasing lending rates of the banks. This has made the customers shift their focus to buying diesel cars instead of petrol variants to reduce their cost of ownership. However, things are likely to change in the near future. According to a report in Business Line, the petrol variant can possibly see a shoot in demand next year provided the proposal to increase the excise duty on diesel cars finds a way in the Budget 2012-13. The report states that the sales of petrol cars are likely to see an increase because of the increase in initial cost of purchase of diesel cars after April 2012. This is because the ownership benefit availed by the customers of diesel cars is likely to face a setback. Presently, the difference of price between petrol and a diesel car is about 16 to 25% though the manufacturing costs are quite similar.

Higher duties will slow down diesel car sales, but give a boost to petrol vehicles. The boost (for diesel cars) received through the subsidy of cost of ownership is not good and has created a huge distortion in demand. Personally, I would like the policy decision to happen now and not wait till the Budget.”, R C Bhargava, Chairman, Maruti Suzuki India said.

Recently it was announced by many companies that they are making investments in India in the field of diesel technology. Mr Bhargava also added that if the company invests in diesel technology and this bill comes along then it is definitely going to be a big blow for the company. All the investments are usually made keeping 30 years ahead. Maruti Suzuki is gradually increasing its diesel engine production after the strike and is also working out a separate diesel engine supply deal with Fiat India to provide the 1.3 litre engine. Hyundai Motor India, the country’s largest exporter of cars has also with held its plans of investing in India by creating an Rs. 400 crore diesel plant. Currently, the diesel engines are being imported from South Korea, according to the report.

Source: Excise Duty On Diesel Cars To Increase

Cheers!
Irish :)