Cars, consumer durables to be costlier in New Year


The prices of cars, two-wheelers and consumer durable goods like TVs and ACs are likely to rise soon. The finance ministry is likely to withdraw excise duty concessions to the auto and consumer durable goods sectors from January 1, sources told NDTV.

This could mean excise duty on cars, SUVs, two-wheelers and consumer durable goods going up by 2-6 per cent. In June, the Narendra Modi government extended the excise duty concession by six months to December 31. According to industry estimates, vehicle prices are likely to go up by 3-6 per cent.

Carmakers had asked the government to extend excise duty relief, saying removal of this incentive could impact car sales. Maruti Suzuki India Chairman RC Bhargava had earlier said that withdrawal of excise benefits could hike automobile prices by up to 4 per cent.

The decision comes at a time when weak tax receipts in a sluggish economy are making it difficult for the government to meet its ambitious fiscal deficit target of 4.1 per cent of gross domestic product for the year to March 31, 2015. According to estimates, the duty cuts have hit the government’s revenue collections by about Rs 2,500 crore a month.

If the concessions are not extended, the excise duty on small cars, scooters, motorcycles and commercial vehicles will go up from 8 per cent to 12 per cent. On SUVs, it will be increased from 24 per cent to 30 per cent. For mid-sized cars, the duty will be hiked from 20 per cent to 24 per cent and for large cars, from 24 per cent to 27 per cent.

The excise duty on consumer goods like TVs, ACs will go up from 10 per cent to 12 per cent.

Earlier, in February, the UPA government had cut excise duty on cars, SUVs, two-wheelers, capital goods (heavy machinery) and consumer durables in the interim budget to help the industry tide over a demand slump. The incentive was applicable till June 30 and later extended till December 31 by the Narendra Modi government.
After two successive years of sales slump, the auto industry had shown some growth posting a growth of 10.01 per cent in April-November period this fiscal at 1.33 crore units as against 1.21 crore units in the year-ago period.

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