The government plans to cut customs duty on import of up to three-year-old automobiles of all capacities and to withdraw a number of tax exemptions being enjoyed by various groups through discriminatory statutory regulatory orders (SROs) in the next budget.
A minister told journalists at a briefing that the government had in fact decided in principle to reduce duty on vehicles of different engine capacities to be imported under various schemes.
“For example, 150 per cent customs duty on import of bigger vehicles is too much and unnatural. So the duty reduction will be across-the-board, but obviously the cut will be significantly bigger on big vehicles and smaller on small ones,” he said.
He clarified that by allowing bigger duty reduction on luxury vehicles the government did not want to favour rich people but it was because that the space for reducing 150pc duty was greater than cutting it from 45pc to 40pc on small cars. Vehicles having a capacity of over 2000cc are liable to 150pc duty.
“The duty reduction will be across-the-board, for 800cc, 1300cc, 1800cc and even 3000cc and above but with varying percentage,” he said, adding that the age of vehicles would remain unchanged at up to three years.
The minister said the government was trying to create a new classification of vehicles below 800cc capacity like 600cc and 700cc to encourage import of smaller cars like Indian Nano car.