So what is a multi-utility vehicle (MUV)? A rugged rural vehicle that helps villagers, or a flashy symbol of urban lifestyle? Opinion is divided in the government – and this is making decisions on taxation tough in the run-up to the budget.
The Heavy Industries Ministry says lower excise tax helps MUVs which are used for public transport in the hinterland, and should not be clubbed with luxury and sports utility vehicles.
Large cars, MUVs and sports utility vehicles (SUVs) attract an excise duty of 20 per cent with additional specific duty between Rs 15-20,000 on some of them, while small cars attract 8 per cent.
With excise collections falling nearly 14 per cent in 2008/09, chances of a uniform tax on cars appear low.
"Reducing the excise duty on MUVs and bringing them at par with small cars is one of the prime recommendations from our side," said a senior ministry official. "Atleast the specific duty needs to go."
But the Finance Ministry is in no mood to give in. It says MUVs account for as much as 26 per cent of excise revenue from automobiles.
“The effective rate of excise duty on MUVs, even after the across-the-board 4 per centage point reduction in December 2008, is at 29 per cent,” said a senior government official.
Models that could gain from a duty cut on MUVs include the Safari and Sumo from Tata Motors, Bolero, Scorpio and Xylo from Mahindra & Mahindra, GM’s Chevrolet Tavera and Toyota’s Innova.