Govt Brings Back Full Excise Duty on Automobiles

Hoping to collect about Rs 2500 crore a month, the centre government ended the excise duty cuts on automobiles and consumer durables from December 31, 2014, resulting in price hike for these products in 2015.

However, the move will benefit the exchequer and help it to meet the Budget target of reining in the Centre’s fiscal deficit at 4.1 per cent of gross domestic product.

Former government had reduced the excise duty on small cars, scooters, motorcycles and commercial vehicles to eight per cent from 12 per cent. For sports utility vehicles, it was cut to 24 per cent from 30 per cent, for mid-sized cars, to 20 per cent from 24 per cent and for large cars, from 27 per cent to 24 per cent.

For consumer durables, the excise was reduced to 10 per cent from 12 per cent. The sops were given till June 30. In that month, Finance Minister Arun Jaitley had extended the concessions by six months, to December 31.

Various trade bodies and business chambers had approached the finance ministry to extend the duty cuts on automobiles. The Confederation of Indian Industry sought an extension till March 31, 2015. That would have cost the exchequer another Rs 750 crore, sources said. For the first seven months of this financial year, the Centre’s fiscal deficit has already totaled about 90 per cent of the Budget estimate for the full year.

Maruti Suzuki India Chairman R C Bhargava said, “The government has to take these decisions, considering all aspects of the economy. It could have a short-term impact on automobile sales but the government has to take into account the health of the entire economy.”