Capital city on exorbitant road tax spree
The vehicle lovers in New Delhi will have to increase their budget as the tax revision has come into effective. The revised tax will add Rs5000 for cars and Rs2000 for two wheelers. The industry analysts see this increase as a grave threat to the net volume of vehicle sales. The country’s capital city has the stake of 20% of all sales of cars in the country. According to the government sources, the road tax will become effective after an official notification in this regard. But the manufacturers and dealers are in full spirit as they anticipate an unprecedented rush for bookings to avoid this increase. This is echoed by the VP of Honda Siel Cars India.
The Sales director of Hyundai expressed the fears about the adverse impact of this hike in the road tax. For the Delhi buyers of cars and motorcycles, this is the fourth increase in the last five months. The additional burden is the increase in the vehicle cost itself due to the higher input costs and conversion to BS IV norms. The revised excise duty too has given way for the overall increase of the vehicles. The government has mooted this revision on twin purpose- to accrue more revenue and to promote public to use government transports. By the revision, there will be 4% tax(200% hike) for cars costing upto Rs6 lakhs which means even a car costing Rs3.5 lakh will have the tax amount of Rs14000. The revision will see 7% tax on the cars in the cost range of Rs6- Rs10 lakhs and it will be 10% for cars costing more than Rs10 lakhs(the current tax is 4%). The worst affected will be luxury cars whose tax would amount to Rs1 lakh.
In case of two wheelers there will be 4% tax on vehicles costing in the range of Rs25000- Rs40000(current rate is 2%). For vehicles costing more than Rs40000 it will be 6% and there is no wonder that the majority of vehicles sold in Delhi are in this second category(Rs40000+). This would mean that the customers have to pay Rs2000 additionally for the vehicle by way of tax. SIAM Director General opined that the revised taxation would not make much effect on the customers thereby maintaining the sale volume stable. The sale of domestic passenger car has shifted to the top gear in both the financial year and the fiscal year. In April 2010, the sale volume was up by 40% (1.43lakh cars) amidst the price rise in most of the vehicles.