[ananbanka]

Hello BHPians!

Based on the budget speech discussed today, I am happy to share that there is a significant reduction in the CBU tariffs of luxury vehicles. Cars that were taxed at 125% of their value, will now be taxed at 70%! Of course, a lot more clarity is required on if there is any new additional cess on this - but the news seems positive.

There is sincere hope in the OEMs passing most of the benefit to the end-consumer, which can lead to roughly INR 15L saving for every INR 1CR spent. There seem to be a lot more tariff cuts on CKD, SKD cars, along with motorcycles.

Have attached the Budget Speech document that was available on Indian Budget Website.

For the ones who are planning to buy CBU cars, waiting for clarity and price-drops from the OEMs is recommended!

Best,
AB

[th2]

Hmm, for cars effective rate with the AIDC means it remains the same?

Old -> 100 BCD + 10 SWS (effective rate)

New -> 70+ 40 AIDC (effective rate)

Motorcycle imports do seem to have some relief though.

Maybe any CAs in this forum can shed more light!

[volkman10]

Government cuts duty on import of motorcycles. The duty cut in motorcycles come at a time when the new president is back in the United States.

Duty on the import of motorcycles, including complete built units (CBUs), semi-knocked down (SKD) and completely knocked down (CKD) units have been reduced.

For motorcycles with engine capacity not exceeding 1600 CC, the duty on CBUs has been reduced to 40% from 50%, while those on SKD units has been decreased to 20% from 25% and CKD units to 10% from 15%.

For larger motorcycles with engine capacity exceeding 1600cc, the reductions are higher. Duty on CBUs will be slashed from 50% to 30%, while SKD units will see a reduction from 25% to 20%, and CKD units from 15% to 10%, as per the budget documents.

The reduction in the duty on imported motorcycles will reduce the cost of those models in the Indian two-wheeler market, which has witnessed a shift in consumer preference towards premium models.


On Cars:

Though basic customs duty on the import of cars and other motor vehicles has also been reduced, it is not clear whether their effective duty rates will change. This is because the budget document shows an addition of the Agriculture Infrastructure and Development Cess (AIDC) components on these vehicles.

AIDC was first proposed in the Union Budget a few years back to improve agricultural infrastructure. On the customs side, AIDC was initially applied on items such as gold, silver, alcohol beverages and crude palm oil.


Link:

[wheelspinner]

So, existing owners will face steep depreciation. Will it induce a market correction in used luxury car prices?

Isn't there also a recent trend to bring cars using carnet to India to get around the whole tax? I saw an Abarth recently with a foreign number plate. Several other exotic cars too.

[locusjag]

So the imported Honda NX500 (CKD) will get a 5% price cut then?

[CrAzY dRiVeR]

Originally Posted by locusjag

So the imported Honda NX500 (CKD) will get a 5% price cut then?

NX500 is a CBU.

But it never had 50% taxes as the bike is imported through the Thai route with the special agreements. Not sure if the new rules will have any effect for countries with such trade agreements.

[SavoyWalrus]

It says imported cars over $40,000, which is roughly 35 lakhs, would have a duty of 70%, down from 125%. But, the budget also says that there will be an Agriculture Infrastructure and Development Cess added to it. So, don't think there's going to be much change in price.

[ghodlur]

Is the budget cuts being a means to facilitate Tesla's entry in India?

In my opinion this is wrong move as this will not encourage the car OEM to manufacture the cars in India, instead import, assemble and sell and take the money back. Am I thinking wrong here?

[1.2TSI7DSG]

Originally Posted by wheelspinner

So, existing owners will face steep depreciation. Will it induce a market correction in used luxury car prices?
.

Main question is

How many manufacturers decide to pass on the benefit to the customers?

If not, they would launch say 6cyl engine variants or special editions that become standard later

[anjan_c2007]

There's apparently a Trump effect with Uncle Sam from across the seas leaving an imprint.



The Harley bikes, the Teslas, Ford Mustang and other US automobiles are the subject of focus though the Japanese bikes, German and British cars (and bikes too) will also drive through the reduced duty green channel.

[volkman10]

Luxury cars still costly, superbikes & EVs get cheaper – Finer details

Items likely to get cheaper:

- High-Performance Motorcycles – duty on motorcycles above 1600cc has been reduced from 50% to 30%. (Trump effect?)

- Semi-Knocked Down (SKD) Kits for Vehicles – Some manufacturers assemble cars and bikes using imported SKD kits. The duty on these has dropped from 25% to 20%, reducing costs for mid-range imports.

-Completely Knocked Down (CKD) Kits – The import duty on CKD kits has fallen from 15% to 10%, making cars assembled in India from imported parts a bit more affordable.

-EV Batteries & Key Components – With the government’s push for EV adoption, capital goods for lithium-ion battery manufacturing are now duty-free, which should reduce the cost of EVs in the long run.

-Semiconductors for Automobiles – To boost India’s chip-making ecosystem, import duties on semiconductor-related materials have been waived, making ADAS, smart dashboards, and infotainment systems more affordable.

Getting Costlier:

Some auto-related costs are going up, making certain vehicles and accessories more expensive.

Smart Infotainment Systems – The import duty on interactive flat-panel displays has doubled from 10% to 20%, making infotainment systems pricier.

Boost for EVs & Charging Infrastructure:

More Charging Stations – The government is pushing for more EV charging stations with incentives for private players to set them up across highways and cities.

Local EV Manufacturing Incentives – New policies support local production of EV motors, controllers, and battery components, aiming to reduce India’s dependence on China.

Tax Breaks for EV Startups – EV startups get funding and tax benefits, boosting India’s shift towards electric mobility.


High end cars - a Twist?

High-End Imported Cars & SUVs – For luxury car priced above $40,000, good news! The import duty has been slashed from 125% to 70%, which should mean that some high-end models will become significantly cheaper, however, a decrease in import duty has been topped up with an increase in Agriculture Infrastructure and Development Cess (AIDC), therefore the effective tax remains the same. This means there will be no reduction in the price of luxury cars.

Summary:
For an automobile enthusiast, this budget has a mix of good and bad news. If in need of an imported superbike, you’re in luck – prices are coming down. But if upgrading your car’s infotainment system, like cars with multiple screens on the dashboard expect to pay more.

For EV/ Hybrid buyers, the long-term picture looks bright, but price reductions will take time to reflect in the market.

Link:

[Turbanator]

I cannot understand this completely but it does look like some savings on CBU Cars

Current Duty

125 % Basic Custom Duty + 28 % IGST + 10 % Social Welfare charge

For 1 Cr. CIF, Net Duties payable are Rs 2,18 Cr i.e. the costs to the importer will be Rs 3,18 Cr. This also includes IGST- 28% - Rs 63 Lac. Look at the enclosed table. For simplicity, if we consider Zero margins for the importer/ dealer, the net costs to the customer after adding 22 % Cess (IGST is adjustable as input) will be Rs 3,88 Cr.




https://www.cybex.in/indian-custom-d...lator-87032191




New Custom Duty

70% Basic Custom Duty + 28% IGST + 40% AIDC

So, using the same calculation new Customs duties payable are Rs 2,04 Cr. (1 Cr CIF + 70% Duty + 28 % IGST = 217,6 + 40% surcharge), i.e the car costs to the manufacturer will be Rs 3,04 Cr as against Rs 3,18 Cr previously. Considering, Zero margins for importer/ dealer, the net new costs to the customer after adding 22 % cess will be Rs 3,70 Cr

Net Savings on 1 Cr CIF - 3,88 Cr less 3,70 CR = 18 Lac.

Since the average Importer/ Manufacturer/ Dealer margins are 10% plus, we should expect more savings. Will manufacturers pass this benefit or not remains to be seen. My own guess is that we may see some symbolic reduction from some manufacturers but most will keep to themselves and instead keep existing list prices which are under pressure due to depreciating rupee.

[Bhodrolok]

No change in effective costs; the reduced duties have been replaced with cess so that the pesky states dont get any part of it and the whole kitty remains with the center.

[m8002?]

Someone correct me if I am wrong.

If there is any reduction, isnt this a largesse to the super rich? Duty reduction on 1600+cc bikes and 3000+ cc cars doesnt exactly look like it targeted for the middle class.

And they increased the price of Solar cells :-) just to make sure that people are taxed for putting up solar panels.

[volkman10]

More on import tax on luxury cars, after duty reduction:

Customs duty on imported cars priced above USD 40,000 (approximately INR
NR 35 lakh) has been lowered from 125% to 70%. However, with the introduction of a 40% agricultural cess replacing the previous 10% surcharge—the overall effective duty remains at 110%.
While the latest Budget signals a reduction in headline duties for imported vehicles, including electric cars like Tesla, the effective duty rates remain unchanged in some cases due to additional cesses.
For instance, while the basic customs duty on imported cars priced above USD 40000 has been reduced from 125% to 70%, a newly introduced agriculture cess of 40% keeps the total tax burden at 110%. This change ensures that the Centre retains the revenue from the cess rather than sharing it with state governments, a move that provides the government with greater flexibility in adjusting overall taxation when needed.

Meanwhile, for Indian consumers, the immediate takeaway from the Budget is that owning a Harley-Davidson or a Ducati has just become a lot more affordable.

Current scenario on currency conversion:




Link: