Corporate Jul 25, 2013
New Delhi: In a relief to car manufacturers,the Revenue Department today clarified that Maruti SX4 andToyota Corolla Altis will attract lower excise duty of 27 percent and not 30 percent prescribed for SUVs.
The clarification issued by the Central Board of Exciseand Customs (CBEC) has laid to rest the confusion whetherthese cars would attract 30 percent excise applicable toSports Utility Vehicle (SUVs) or 27 percent meant for largesedans.
"...it is clarified that the afore-cited motor vehicles(Maruti SX4, Honda Civic and Toyota Corolla Altis), which areknown as sedans, will attract the excise duty of 27 per centas applicable to large segment cars", CBEC said in acircular.
The clarification was sought by car makers as severallarge sedans have similar technical specifications as that ofthe SUVs.
Honda Cars India said meanwhile that since it had alreadystopped production of Civic in India, the changes proposed inthe Budget had not impacted it.
While increasing the excise duty on SUVs to 30 percentin the last Budget, the government has defined three featuresof the SUVs -- engine capacity of over 1500 cc, length morethan 4,000 mm and ground clearance of 170 mm and above.
Finance Minister P Chidambaram in his Budget speech hadsaid: "SUVs occupy greater road and parking space and ought tobear a higher tax. I propose to increase the excise duty onSUVs from 27 percent to 30 percent. However, the increase willnot apply to SUVs registered as taxis."
The CBEC clarification will provide some relief to thecar manufactures who are facing decline in sales on accountof overall slowdown.
The auto industry has been demandingreduction in duty on SUVs, which till recently was the fastestgrowing segment, to 27 percent.