Excise duty concessions for automobiles extended by six months

Car manufacturers as well as customers can now breathe a sigh of relief as the government today announced an extension of the excise duty cut on automobiles for six more months. The concession ranging from four per cent to six per cent was supposed to be rolled back on June 30, though the announcement by Mr. Arun Jaitley, the finance minister, has now extended it till December 31.

"Excise duties for some vehicles were reduced in February this year. Some concessions were also granted to some capital and consumer durables. The government has decided to extend this facility further for six months," Jaitley said.

In February, the announcement of the Interim Budget had resulted in a reduction of excise duty on cars, two-wheelers as well as commercial vehicles. The duty on small cars, motorcycles, scooters and commercial vehicles was reduced from 12 per cent to eight per cent while that on SUVs was cut from 30 per cent to 24 per cent. Subsequently, a majority of car manufacturers passed on these tax benefits to the customers by announcing a cut in prices.

Commenting about this announcement, Arvind Saxena, President and Managing Director, GM India said, “It’s a welcome decision and we hope government will extend it for the full year in the budget as the sector continues to be sluggish. We also expect government to announce other measures in the budget to revive the growth.”

Earlier this month, members of SIAM met with the commerce minister, Nirmala Sitharaman, asking for a continuation of the excise duty cuts as the reduction in prices saw the car sales in the country report a positive growth after a long time. If the government hadn’t extended the concessions, car manufacturers would’ve had to increase the prices again, which would’ve surely dampened the car sales once again.

Mr. Vikram Kirloskar, President, SIAM has warmly welcomed this move by the government. “We are certain that the extension of the reduced Excise Duty will contribute positively to improve the buyer sentiment and would help in bringing about a sustained recovery in the automotive industry that has been languishing for over two years now. On behalf of the entire automotive sector, I would like to thank Government for their very timely and supportive role,” Mr. Kirloskar said.