The Finance Minister of India, Mr. Arun Jaitley, presented the union budget 2016, wherein he announced that the cars in India costing above Rs. 10 Lacs will be charged with extra 1% LUXURY TAX over and above the other taxes levied on the passenger cars.
However, this is not a substantial increase on the overall cost of the vehicle, as those costing above Rs. 10 Lacs will witness a minimum increase of Rs. 10,000 and the popular names that are likely to get affected by this change include Tata Safari Storme, Renault Duster, Mahindra SUV, et al.
The minister also charged 1% infra cess on small petrol, CNG, LPG cars that fall in sub-4-metre category along with an engine capacity below 1200cc. On the other hand, diesel cars in sub-4-metre line-up having engine capacity below 1500cc will bear an additional cess of 2.4%.
The budget invites comments from Gaurav Talwar, Partner, Felix Advisory, who said, "The budget 2016 has imposed a tax collected at source of 1% on purchase of luxury cars exceeding value of INR 10 lakhs. Further, an Infrastructure cess of 1% on small petrol, LPG, CNG cars, and 2.5% on diesel cars of certain capacity and 4% on other higher engine capacity vehicles and SUVs is proposed. The above measure will have an impact on the price of the cars, and may also impact overall demand."
A breathing escape from the current budget on cars is that there is no word on the excise duties, hence a big relief as there were stronger chances of increase in the excise duty seeing the way the 2016 budget was introduced.
To make the travelling comfortable and easy, the government has allocated a budget of Rs. 2.18 Lacs crore for Roads & Rails for the financial year 2016-17. Among the allocated budget, Rs. 55,000 crore will be reserved for roads and highways and Rs. 97,000 crore for the construction of new roads.
The finance minister also went ahead and stated that there are nearly 85% stalled projects on roads, which will come back on track along with the conversion of 2000 kilometers of state highways into national highways.