Excise duty, vehicle prices could rise from July

Earlier this year, in the interim budget for 2014, the Government of India had announced that it was slashing the rates of excise duty on vehicles. Following this, many manufacturers passed on the benefits of the reduction to the customers by slashing the prices of their products. However, this reduction in the rate of excise duty would be applicable only till the June 30, 2014 and unless the new Government comes out with a notification before that date, according to precedence and law, the duty structure valid before the interim budget will prevail. This means that manufacturers will hike the prices of vehicles. Prices of cars and bikes are likely to go up by 4.5-5% and those of SUVs by 6%.

The interim budget, which was presented by the previous Government, announced the cut in duty to try and revive the flagging automobile market in India. The current Government will introduce a full budget for fiscal 2014 in July and rumours are doing the rounds that the excise duty on vehicles is likely to be hiked. While members of the Society of Indian Automobile Manufacturers (SIAM) have met the Commerce Minister in this regard, they are yet to receive a response.

With the economic slowdown, car sales in India have been falling. 17.87 million units were sold in the country during fiscal 2013-14 - down 4.65% from 2012-13. The fiscal 2012-13 ended with car sales 6.69% lower than the previous year.

Source: ET Auto