Finally, after a long and anxious wait, Toyota can breathe a sigh of relief, as the Revenue Department has clarified on 24th of July, 2013 that Toyota Corolla Altis will not attract the higher excise duty that is meant for the SUVs and will fall under the lower excise duty of 27 percent.
In the month of February this year, the Union Budget had announced that all the SUVs that are longer than 4 meters in length would attract 3 percent addition excise duty. Due to this decision, not only the big SUVs but also several big sedans fell under the higher excise duty, which had to pay to 30 percent tax in place of 27 percent. There was a big uproar regarding this among the car manufacturers, as their cars’ prices also had to be increased due to the higher excise duty.
There was also a huge amount of controversy and confusion, as the higher tax was supposed to be applied on the SUVs or Spots Utility Vehicles and not sedans, but as it strictly mandated the length of the cars crossing 4 meters will attract this hiked excise, the long sedans were also falling under the higher tax inconvenience. During the last Budget, when increasing the excise duty on SUVs to 30 percent, the government of India has defined three particular criteria of the SUVs, namely the engine capacity of more than 1500 cc, length of more than 4 meters and ground clearance of 170 mm and more.
However, all the confusions ended, when the Central Board of Excise and Customs (CBEC) issued the clarification that only the large SUVs with the mentioned criteria will have to pay 30 per cent excise duty, while the large sedans will pay only 27 percent.
Not only Toyota Corolla Altis, but the Maruti Suzuki SX4 and Honda Civic were also subjected to this confusion, which finally got cleared as the CBEC told in a circular that as these cars are sedans, they will attract the excise duty of 27 percent as applicable to the particular segment.
This clarification was wanted by car manufacturers, as many large sedans feature technical specifications that are closely similar to that of the Sports Utility Vehicles.
The Indian Finance Minister P. Chidambaram during his speech in the Budget said: that the Sports Utility Vehicles take greater road and parking space and thus should bear a higher tax. He added that he proposes to increase the excise duty on the SUVs from the 27 percent to a hiked 30 percent, but this increase will not be applicable to the SUVs that are registered as cabs.
This CBEC clarification will definitely provide solace to some car makers who are already struggling with the low demands in the market slowdown and could not bear the excess excise duty. The primary SUV makers such as Mahindra & Mahindra are also demanding the reduction of the imposed excise duty on SUVs back to 27 percent, as the SUVs’ sales are hit due to increased prices.
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Tagged: Toyota Corolla Altis
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