Additional Tax on car purchase

Indian Automakers association expects lower sales for the year 2016 starting from april. This is the second time the projections have been lowered for the year. Last year the car sales stood at 7.24 percent the highest in the past few years. This comes after the government introduces additional taxes on car purchase in the 2016-17 budget. Cars above INR 10 lakh will have an additional 1 percent luxury tax, SUVs and heavy vehicles will be charged 4 percent excess. Even small cars have not been spared by the finance minister; the budget imposes 1 percent infrastructure cess on small cars. Diesel cars have 2.5 percent additional tax.
The decision by the government comes after the increased pollution levels in the country. Finance Minister stated that the increase in taxes was not from a revenue point of view; rather it was raised over environmental concerns.
There was a severe media outcry over increasing pollution levels in major Indian cities. A study on pollution level patterns point to the fact that individual vehicles cause 40 percent pollution in Indian cities. In World Health Organization (WHO) polluted cities of the world list Indian cities have secured 14 places in the top 20.
The Supreme Court banned Diesel cars in Delhi after the city was listed as the most polluted city of the world in the WHO list. Diesel cars account for 40 percent of car sales in India.
Maruti the biggest automaker in India said that the government’ decision in singling out car industry over the pollution issue was unfair.

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