[Musa]

Expected price increases due to the Budget 2013.
From ToI, 1 Mar 2013.

[Santoshbhat]

Unless the excise dept. issues a clarification or alters the 'SUV definition' with a height criterion, sedans like the Altis, SX4 and Civic will fall under this category, while cars like the Laura, Jetta and the Cruze will get away. Sad to see the duty structure giving unfair advantage to certain cars purely due to reasons of technicality.

Originally Posted by Hayek

. But why should the 42,000 fools who declare an income of over Rs. 1 crore and contribute over 20% of the personal income tax take in a country of 1.2 billion be the only ones who are hurt by the budget?

Coz these 42,000 fools who contribute 20% of the personal income tax in a country of 1.2 billion still get just one vote, same as the guy who pays no tax. They can take the risk of losing 42,000 votes, can't they?

I think there was a surcharge of 10% on Income over Rs. 10 lacs which was removed a few years back. I think they've realised that milking the rich is not a good idea as there may be quite a few of them now in our country. Let's now target the super rich.

[hkollar]

Originally Posted by Santoshbhat

The Govt. of India builds roads, bridges, provides 'subsidized' diesel (that's debatable I know) and whole lot of stuff which is required by the people of India. To this end they need money and the only way they can do that is tax.

I know nobody likes to pay more tax . The govt. has increased excise duty by 3% on big SUV's which is a luxury very few in the country can afford. On Rs. 25 lakh SUV, this works out to something like Rs. 75,000/-. I am not justifying the Govt's. actions here buddy. They've got a lot of things on their plate and this is one very insignificant part of the budget in terms of the overall impact it is going to have on the people of India. All I am trying to say is that likening the Govt. to an extortionist for hiking excise duty by 3% on big SUV's is just too extreme a reaction.

I read this wonderful book last year called "Why nations fail". The central premise of the book is that the nations which have 'extractive' (if not extortionate) govts, tend to fail. It is an interesting point to understand if India is an extractive system. From most angles it is. A small set of self-centered elites perpetuate a system, that's venal, corrupt & unequal. So, we are on path to failure if things don't change.

However, Raising excise duty by 3% on SUV is a non-issue (not at all extortionate). In fact, in India we have way too low taxes on private vehicles.

Let's consider china. The car prices are marginally less than in India (except imported cars cost far more in India due to high import duty).

However, for years, a vehicle owner had to pay what is called "Yang Lu Fei" or 'care for road' tax. It was 100RMB for small cars and 200RMB for SUV class vehicles. i.e. Rs.800 & Rs. 1,600 per month!

The administration of this became difficult (as with our yearly road tax) and they stopped this tax, and rolled it in to Fuel prices. Fuel costs more in China than India (petrol at Rs.75/ltr & diesel at Rs.70/ltr).

In 2012, china also levied a new tax called 'car & vessel tax'.

This is a yearly tax is collected by the insurance companies along with insurance amount (Insurance being mandatory). Here is what they pay Yearly (1RMB = Rs. 8):

Sub 1.0L vehicles – 300RMB
1.0 to 1.6L – 420RMB
1.6 to 2.0L – 480RMB
2.0L to 2.5L – 900RMB
2.5L to 3.0L – 1,920RMB
3.0L to 4.0L – 3,480RMB
4.0L and above – 5,280RMB

Effectively private car ownership in China is far more expensive than in India.

It is even more expensive in Singapore..

The only thing govt. has to do differently in India is to ensure the tax money isn't going in to a black hole and we get roads like in China or Singapore!!

If govt. can't ensure that, then they have no business taxing us heavily for SUVs which work better on bad roads.

[JoshMachine]

Musa, interesting table you have put there...
From a car sales volume point of view, guess only the bottom 4 car sales might be affected. For the others, the increase comes out to 2% or even less for some..not sure an increase of 25,000 will really hurt if anyone is paying INR 16 lakh OTR for a XUV500.

[Maky]

Here are my thoughts on the Budget 2013 in relation to the changes mentioned for the Motor Sector:

- Higher Import duties would indeed encourage local assembly. I would personally like to see the import duties on CBUs increased even higher. Want to sell a car in India? Make it in India.

- Higher excise duty on SUV is wonderful. There are far too many big large SUVs which hog space on the road not to mention use their massive size to properly bully small car owners as well, for where I live anyway, I hope it will discourage people to not buy them. I should mention I think I'm being highly biased for my personal dislike for SUVs and some of the people who drive them the way they do.

- Duty on higher displacement bikes makes little sense. Perhaps someone could enlighten me on the benefit apart from that to the government.

- Subsidy benefits for electric cars is wonderful. I would suggest reduction on import tax for the more popular and featured electric vechilces by Nissan, Toyota etc.

- While I can see why, I question future results of this so called 'Independent regulatory authority' but that remains to be seen.

- Unless I've read wrong, These 'Adalats' are being setup by the Insuarance companies. Won't these mini-courts that are being setup by the Motor Insuarance companies themselves be biased to them?

This is slightly off-topic but still relavant to us petrolheads so I'll mention my thoughts on it, I would like the goverment to relax the rules ever so slightly on the import of second hand vehicles. Perhaps get rid of the rule wherein a car may be a max of upto 3 years old to be eligible for import. Tax vehicles that are over the limit so India doesn't become a dumping ground for used cars but at the same time allow us to own our dream vintage vehicle someday.

[aroop]

From the Maruti stable, the only victims are SX4, Kizashi and the Grand Vitara, none of which bring home any appreciable numbers. Maruti might as well consider them as showpieces.

The Ertiga just missed being a victim owing to its smaller engine.

[sarathlal]

Civic is an SUV? Oh man, how can this car get into this list?

Civic is one of the sedans we have here, which is famous for its 'made for highway' mannerism and infamous for its 'bottoming out', and now we have it classified as an SUV.

Or are there any more fine prints that we miss?

[CaliAtenza]

The thing is, everyone should pay their fare share, depending on how the tax brackets go. But why increase duties on vehicles; in fact they should be lowered to stimulate growth and production. The higher road taxes arent improving the roads from what i saw before i left India; or maybe thats just in KA :(.

[zenren]

Originally Posted by aroop

From the Maruti stable, the only victims are SX4, Kizashi and the Grand Vitara, none of which bring home any appreciable numbers. Maruti might as well consider them as showpieces.

The Ertiga just missed being a victim owing to its smaller engine.

Agree about Diesel but how about the Petrol Ertiga? It is >4m and >1.2L but it doesn't seem to fit into the list of hikes. May be MSIL decided to absorb that margin since a hike on petrol variant alone might not help them at all.

Originally Posted by sarathlal

Civic is an SUV? Oh man, how can this car get into this list?

Civic is one of the sedans we have here, which is famous for its 'made for highway' mannerism and infamous for its 'bottoming out', and now we have it classified as an SUV.

Or are there any more fine prints that we miss?

I think Civic might be a case of hike in CBU rates and not necessarily the SUV criteria.

[rock75]

Originally Posted by anu21v

Another simplistic way to look at it is; any vehicle which is paying 27% duty is the only one where this excise tax increase is applicable. Which would mean no additional tax on Ertiga, Quanto or Enjoy and Ecosport

You are right in interpreting it this way. Obviously the FM or the bureaucrats at the finance ministry are no petrol heads and couldn't care less about MUV/SUV/LUV distinction! Any vehicle having engine capacity above 1500 cc is presently being charged a duty of 27% and that will go to 30% after 1st April.

Therefore Ertiga, duster won't be affected, but given that other makers will increase prices, Maruti and Reynault may follow suit citing ' increased input costs and rupee dollar rates'

@ Zenren

Ertiga petrol has 24% duty(<1500cc engine)and even diesel has 24% duty as it is above 4 meters in length.

[azeemhafiz]

Originally Posted by Santoshbhat

Coz these 42,000 fools who contribute 20% of the personal income tax in a country of 1.2 billion still get just one vote, same as the guy who pays no tax. They can take the risk of losing 42,000 votes, can't they?

I read Hayek's point quite differently. For a fact there are easily more than 42k tax evading, black money dealing rich folks in almost every single Major city in our country. Every single state in our country will have more than 42k folks earning a crore+ - Easy!

The fact is our black economy gets them below the 1CR annual income mark. With most of them maintaining the wealth unaccounted, the government is left with no option other than tax the poor souls who declare that much income.

Another interesting stat that I read was that there are only 4 Lakh folks who have declared (or show) income greater than 20 Lakhs.

Its not the government entirely to blame - It is the tax evading (sales tax, income tax and all tax included) citizens that are to be.

Following the rules like this one and many other, makes one a laughing stock in our country.

I know most of us feel good about increasing the excise duty on cars and emotions such as 'If you want to sell em here, build em here' - Thanks heavens that is not the sentiment shared by governments across the world. It would eradicate most of our Jobs and would make the world a nastily selfish place to be.

Thanks to GTO and Redline for the detailed synopsis of the budget and its impact on AutoIndustry & Autousers. To me it looks like a suicidal budget proposition from the FM. How can they expect to come back with the share of votes from AutoLiterate population?

Very very depressing !

[rock75]

Originally Posted by azeemhafiz

I read Hayek's point quite differently. For a fact there are easily more than 42k tax evading, black money dealing rich folks in almost every single Major city in our country. Every single state in our country will have more than 42k folks earning a crore+ - Easy!

The fact is our black economy gets them below the 1CR annual income mark. With most of them maintaining the wealth unaccounted, the government is left with no option other than tax the poor souls who declare that much income.

Another interesting stat that I read was that there are only 4 Lakh folks who have declared (or show) income greater than 20 Lakhs.

Its not the government entirely to blame - It is the tax evading (sales tax, income tax and all tax included) citizens that are to be.

Following the rules like this one and many other, makes one a laughing stock in our country.

As per the parliamentary committee report on Direct tax code in 2011-2012 only 17.8 lacs people reported an income of above Rs 10 lacs ( Rs 10-20 lac:13.68 individuals and Rs 20 lac and above : 4.06 lac individuals) This number is a big joke. It is not that the FM has no option. The government has all the powers in this world, if they want to. Take the case of Madhya Pradesh, only state where the lok ayukta is actually working, we have cases of petty govt officials caught having 10's of crores worth of property!

About the business men the less said the better, they employ every trick in the book to evade the taxes and the salaried class bear the brunt. A sustained target driven drive is needed to bring such people in to the tax net and punitive taxes imposed on them.

[arjab]

So the EcoSport seems to have escaped the dragnet. It is less than 4000mm(bumper to bumper) and will be coming in with a 1-litre petrol and 14xx cc diesel.
Renault too will be relieved. Again 14xx Diesel . So it ducks in below the 1.5Litre cap.

Entire Tata Motors range will be affected. Also Mahindra (with the exception of Quanto)

Innova will be affected, but the Evalia and the ERTIGA will escape as they have engines displacing less than 1500cc.

Skoda's excellent Yeti is another victim.

The definition of SUV is still very vague. Length, GC and displacement alone cannot be the determinants of SUV. Other parameters such as Drivetrain configuration (4x4 or 4x2), frontal area, aerodynamic drag, front windscreen A-pillar rake angle etc should also have been taken into account.

If this rule stays in the coming years, expect to see a rash of "sub-4metre hatch derived" soft roaders dotting the streets of India.

If wishes were horses and pigs could fly over the moon, maybe some clever manufacturer will come up with a 3999mm SUV with 4x4, powered by a twin - turbo 1499cc engine and having adjustable suspension capable of adjusting the ride height from 169mm - 200mm !!

[Santoshbhat]

Originally Posted by azeemhafiz

I read Hayek's point quite differently. For a fact there are easily more than 42k tax evading, black money dealing rich folks in almost every single Major city in our country. Every single state in our country will have more than 42k folks earning a crore+ - Easy!

That's exactly why those 42,000 are fools . Direct tax penetration is abysmally low in our country. Indirect taxes is their best option if they want to mop up more money. Take the case of the excise duty hike on SUVs. No way anybody can evade this tax as even if the buyer is buying this SUV with 100% 'black' money, Govt. still gets it's 30%.

Edit :

Originally Posted by arjab

If wishes were horses and pigs could fly over the moon, maybe some clever manufacturer will come up with a 3999mm SUV with 4x4, powered by a twin - turbo 1499cc engine and having adjustable suspension capable of adjusting the ride height from 169mm - 200mm !!

Just being shorter than 4m is enough to duck out of this classification. For a vehicle to come under this class it has to satisfy all of the criteria i.e.length, engine capacity and GC.