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2018 Budget: Locally assembled luxury cars to cost more

February 03, 2018, 02:28 PM IST by Nikhil Puthran
2018 Budget: Locally assembled luxury cars to cost more

Planning to buy a luxury car soon? You might have to stretch your budget considerably as fresh proposals in Budget 2018 will see an increase in taxation for locally assembled and imported cars. The original budget proposal proposed 60 per cent custom duty on Completely Knocked Down (CKD) imports as against ten per cent which is currently being paid. Under fresh revision, customs duty on imported engine components has been raised from 10 to 15 per cent, along with a hike in the duty on the vehicle parts from 10 to 15 per cent.

Owing to fresh revision in taxation for CKD units, car buyers in the country are likely to witness an increase in cost between three to five per cent. The move will affect all major car manufacturers such as Mercedes-Benz, Audi, BMW and the Jaguar Land Rover which have their assembly facilities in India. However, the move will support government’s plan to promote local sourcing and support the make in India initiative.  

Leading luxury car manufacturers in India like Audi and Mercedes-Benz have expressed disappointment and believe that it will restrict the growth of luxury car industry in India. Moreover, cars which have arrived as completely built up (CBU) or are fully-imported will also cost more. Reports indicate that one section of the customs duty on CBUs might be increased to 25 per cent from the current 20 per cent. This could affect the total import duty which is already heavy and over 180 per cent.

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