India's new tax for bigger cars applicable to all fuel types-trade group | Reuters - Firstpost
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India's new tax for bigger cars applicable to all fuel types-trade group | Reuters

Updated: Mar 2, 2016 16:25 IST

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NEW DELHI India's plan to levy an additional tax of 4 percent on large cars will apply irrespective of the fuel used, the country's auto industry body said on Wednesday.

In his annual union budget announced on Monday, Finance Minister Arun Jaitley imposed a 'green' tax on passenger vehicles, effective immediately, aimed at helping fight high levels of air pollution and congestion.

The budget document, however, did not specify if the highest tax of 4 percent would be applicable on vehicles running on a specific fuel or all transportation fuels.

"I propose to levy an infrastructure cess of 1 percent on small petrol, LPG (liquefied petroleum gas), CNG (compressed natural gas) cars, 2.5 percent on diesel cars of certain capacity and 4 percent on other higher engine capacity vehicles and SUVs," Jaitley had said in his budget speech.

Industry lobby Society of Indian Automobile Manufacturers (SIAM) said on Wednesday that the higher tax would apply to all cars and sport-utility vehicles longer than four meters in length and with engine capacity of more than 1200cc for petrol cars and higher than 1500cc for diesel.

The new tax has come as a "rude surprise" for the auto industry, said Sugato Sen, deputy director general at SIAM.

According to the budget document, three-wheelers, electric and hybrid cars and vehicles running on fuel cell technology are exempt from the new tax. Vehicles registered as taxis and ambulances, and those used by physically handicapped persons are also exempt.

(Reporting by Aditi Shah; Editing by Muralikumar Anantharaman)

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