Government Proposes 15 Pct Discount to People Scrapping their Old Cars
BENGALURU: It’s a really good time to consider trading your old car for a new, as government decides to offer up to 15 percent discount on new vehicles you buy. This initiative is a part of the policy prepared by road transport and highways ministry which allows anyone voluntary scrapping their four-wheelers older than 12 years (pre-Bharat stage II vehicle) to access up to 15 percent discount. This discount shall include manufacturer discount and rebate on excise duty. This proposal comes in sharp contrast to automakers hiking car prices after Finance Minister Arun Jaitley announced a 'green tax' in his Budget 2016-17.
The policy further proposes to cover commercial and passenger vehicles and while junking a certificate will be issued. You’ll be amazed to know that more than 40 lakh Pre BS-II four-wheeler vehicles exist for both commercial and passenger segments in India. The underlying objective here is to modernize the fleet as Pre-BS II vehicles alone account to causing 10 times more pollution when compared to BS-V vehicles.
As a consequence of the green tax policy, automobile companies like Maruti Suzuki India, Mercedes Benz, Honda Cars India, Hyundai Motors, and Tata Motors are hiking their car prices. Honda Cars India will see an escalation in prices somewhere around 4,000 INR to 80,000 INR. Even Hyundai Motor is not far behind in this race as they are also increasing their car prices by 3,000 INR for smaller cars like Eon, and by 80,000 INR on SUV Santa Fe. Basically, the infrastructure tax of 1-4 percent as proposed in the Budget adds up to cars getting costlier by 2,000-80,000 for the mainstream models and up to 4-5 lakhs for luxury vehicles. However, it is a relief to know that the tax policy shall not apply to smart hybrid vehicles.
The tax rates have also been decided based on the engine capacities and specifications. The government plans to impose a 2.5 percent cess on diesel vehicles of length not exceeding 4 meters and having an engine capacity of about 1,500 cc. An additional tax of 4 percent will also be imposed on SUVs and bigger sedans having engines with higher capacity.
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