This is the second year in a row where the government has tinkered with customs duty
Multi-seater vehicles that are fully imported into the country will see a significant price hike following a rise in customs duty to 30 percent from 25 percent. These will affect those companies who import large passenger vans and buses.
Finance Minister Nirmala Sitharaman has proposed to raise customs duty on all vehicles seating 10 persons or more. This is the second year in a row where the government has tinkered with customs duty.
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The Finance Minister ignored the demand of car makers, who have been demanding a reduction in GST to 18 percent from 28 percent to spur growth.
In 2018, the then Finance Minister Arun Jaitley had raised customs duty on to 25 percent from 20 percent on the same segment. Last year, the government had raised customs duty on completely knocked down (CKD) kits to 15 percent from 10 percent. This forced all luxury car makers to hike prices by five percent.
Sitharaman also proposed to raise customs duty on to 15 percent from 10 percent on those vehicles, which comes fitted with engines from outside India. Chassis of such vehicles will be charged at the revised rate of 15 percent.
The Finance Minister also proposed to raise customs duty on vehicle bodies including cabs to 15 percent from 10 percent.
In addition to the above, customs duty has been raised on a number of items automotive parts such as windscreen wipers, defrosters, demisters, sealed beam lamp units, parts of visual or sound signalling systems, horns, intake air filters, oil or petrol filters, catalytic converter, vehicle locks, glass mirrors, friction material. The increase range from 2.5 percent to 7.5 percent.A previous version of this story wrongly mentioned that fully imported cars will get costlier. The error is regretted.