Union Budget 2016-2017: Impact on Auto Industry

Union Budget 2016-2017 can be called as a mixed bag of joy and sorrow for the auto industry. No once can completely say a ‘no’ to the announcements as they cover most of the importantly needed amendments whereas bringing a host of tax changes, leading to expensive vehicles from the coming financial year.

The most selling segment comprising of small cars below 4 meters have been differently treated, depending on the fuel type of the car. Petrol cars below 1,200 cc attracts 1% additional infrastructure cess whereas the diesel cars below 1,500 cc attracts 2.5%. Exceeding the length and engine limit would cost the car 4% infrastructure cess, leading to higher amount on SUV’s and sedans.

Taxi’s, electric, hybrid, 3 wheelers and ambulances are safe from these values. The surprising fact comes out as many cars would be confused within different boundaries as they being small cars would have the tax of a large car due to one or the other measure from the above restrictions.

The amazingly different thing comes when you buy a car above INR 10 lakh, attracting 1% tax as counting them luxury. This means that the difference in base and top variant of most of the sedans would rise very soon. Focus on road building has made the budget look much better as people will happily pay a few extra thousand if they have the peace of mind of having a good road for longer car life.

The total investment of INR 97,000 Crore in the road sector can bring the much desired change in the road conditions and better cars with more life can be expected more sooner than ever.

There have been deductions in various costs related to automobile sector whereas the increases can also not be ignored at all. The final changes can be seen everywhere across the country from April 1, 2016 and yes, we still have 31 days to save some money on the purchases in 2016.