If you have recently bought a new car, it’s not only an enjoyable occasion for you and your family; it’s an awesome occasion for the government as well, as they collect many taxes from the car you just bought. In this article, we will learn about why cars are luxurious in India and how taxes play a major role in making them expensive.
GST varies from 29% to almost 50% based on the car and its engine. For vehicles that are sub-4 meters and have a petrol engine that is less than 1.2 litres, the taxes are calculated at 28% GST and 1% CESS, totalling to 29%. Likewise, this tax varies from vehicle to vehicle, based on the length, type of fuel, and engine capacity.
Road Tax and Registration Charges
The state government includes road tax, and this varies from state to state depending on the type of car, the fuel it uses, and the engine capacity. Registration charges are mandatory when you purchase a new vehicle as well as when you buy a used vehicle.
Expensive cars in India: Excise Duty on Fuel
The car that you buy operates on fuel (petrol, diesel, or CNG). But you pay excise duty on the fuel that you use for your car, which ranges from 35 percent to 45 percent of the fuel price.
Other charges and taxes
The car that you buy operates on fuel (petrol, diesel, or CNG). But you pay excise duty on the fuel that you use for your car, which ranges from 35 percent to 45 percent of the fuel price.
Other charges and taxes
Expensive cars in India—Import Duty
Currently, India imposes 100 percent duty on fully imported cars with a CIF (cost, insurance, and freight) value greater than USD 40,000 and 60% on those costing less than the amount as explained in the table above. If you buy a car worth Rs 24 lakh, you would end up paying Rs 56,83,891 as the cost of importing this car to India and another Rs 32,83,891 as custom duty, making the car super luxurious at Rs 1,13,67,782.
Cost of Parts
Sometimes the car is not imported as a CBU (Complete Built-Up) unit. Usually, parts are imported and later assembled in India and treated as CKD (complete knockdown) units. Parts imported under the CKD arrangement also attract heavy taxes. For engine or gearbox mechanisms in pre-assembled form but not mounted on a chassis or body assembly, the import duty is calculated at 30 percent. While engine, gearbox, and transmission mechanism not in a pre-assembled condition are charged with 10 percent import duty.
Expensive cars in India: Dealer Markup
Very few people are aware of the term ‘Dealer Markup’. This refers to the cost, or margins to the price of the vehicle. The amount of markup permissible to the retailer finds the money he makes from selling every unit of product. Higher the markup, greater the price to the consumer, and larger the huge money the retailer makes. This also plays a role as a factor that makes cars budget-hit in India.