Govt clarifies large cars not to attract more than 27% duty

A persistent dip in car sales has made the government clarify certain issues regarding excise levy on the large car segment.

The Revenue Department on Thursday clarified that Maruti SX4 and Toyota Corolla Altis will attract lower excise duty of 27 per cent as these did not fall into sports utility vehicle category.

 "It is clarified that the afore-cited motor vehicles (Maruti SX4, Honda Civic and Toyota Corolla Altis), which are known as sedans, will attract the excise duty of 27 per cent as applicable to large segment cars", the Central Board of Excise and Customs said in a circular.

 The clarification after car makers wanted to know whether large sedans with similar features as SUVs would attract same increase in excise duty as prescribed in the Budget this year for SUVs.

While increasing the excise duty on SUVs from 27 per cent to 30 per cent in this year’s Budget, the government has defined three features of the SUVs -- engine capacity of over 1500 cc, length more than 4,000 mm and ground clearance of 170 mm and above.

Worrying sales

Car sales in India have fallen for eight consecutive months and a 9 per cent dip in June had prompted industry body Society of Indian Automobile Manufacturers (Siam) to ask the government for stimulus package to pep up sales.

Apart from concerns like lack of economic growth, the rupee's fall has dented car sales as fuel costs and car prices both have been affected.

The auto industry has also been demanding reduction in duty on SUVs, which till recently was the fastest growing segment, to 27 per cent.