Government reduces Withholding tax on Automobiles; Budget 2017-18

This budget of 2016-17 is historically significant being the last one from the current political government. Although the opposition and economists see it differently, however, people who love to buy new cars are quite excited.

The government has reduced car registration fee and customs duty for the tax return filers while no tax relief has been provided to the non-filers. The relaxation of duty is directly related to the car’s engine.

New Registration Fees

According to the budget document, the new registration fee for the cars are:

  • Rs. 7,500 for the 800cc cars (reduced from Rs.10,000)
  • Rs 15,000 fro 1000cc cars
  • Rs. 25,000 for 13000 cc cars (reduced from Rs. 3000)

One of the interesting features of the new Budget 2017-18 is the abolishment of withholding tax on the cars that will be sold under Prime Minister Scheme.

In addition to this, the government maintained the tax relief of 25% on 1801cc-2500cc hybrid cars. Through this move, the government seems to be promoting the eco-friendly cars.

However, the generosity of government for the automobiles sector is being witnessed from last year when in 2014-15 it gave full tax exemption on the import of 1200 cc hybrid cars. Moreover, the government also gives 10% exemption of duties on 1800 cc locally manufactured cars.

The similar bounties were given in the previous year budgets irrespective of the fact that automobiles do not fall in the necessary items. Yes, the exemptions provided on cars give relaxation to the tiny minority; however, the similar amount could be allocated for essential items that might benefit the poor.

Surely, the exemptions provided on cars give relaxation but to a small minority. Sadly, such incentives could not be seen for essential items that might benefit the poor.

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