Small cars, Hybrids and EVs get Budget sops

The Union Budget has been tabled, and the auto industry has received its share of sops and benefits. Of course, while some within the industry might argue that these benefits aren’t what they were hoping for, the fact of the matter remains that the buying price of vehicles has come down, particularly small cars and two-wheelers which have received a reduction in excise from 16 percent to 12 percent. In hard cash, this would translate to a saving of Rs 2000 for a bike buyer to about Rs 10,000 for someone looking at a hatchback. Hybrids on the other hand have received a 10 percent reduction in excise from 24 percent to 14 percent. For Honda and M&M who are keenly looking at this niche with their Civic hybrid and Scorpio hybrid respectively, this is indeed good news. Electric vehicles like the Reva, Hero Velociti and TVS Scooty Teenz enjoy a tax reduction from 8 to zero percent. For vehicles using alternative fuels such as biodiesel or gasohol however, there remains a grey area as to how much they will be taxed. We’ll keep you updated as we get a clearer picture.

Taxes on recycled scrap steel and aluminium and steel melting have been reduced to zero from the previous five percent. This definition is ambiguous however, and open to interpretation, and whether this will also contribute to lower car prices remains to be seen. A fact of the matter though, is that auto makers who until now were lamenting rising material costs can look at ways of leveraging this reduction in raw material costs to widen their margins.

Motorsport enthusiasts can also seek succour in the knowledge that “encouragement to sports” has been exempted from Fringe Benefit Tax, and raw materials for sporting goods have been exempted from duty. So now you can get that carbon fibre monocoque cheap!