SUVs, imported cars, eating out to cost more

  • PTI, New Delhi
  • |
  • Updated: Mar 01, 2013 02:50 IST

John Mendel, executive vice president of Sales, Honda America, introduces the Honda Urban SUV Concept at media previews for the North American International Auto Show in Detroit. AP Photo

Sports utility vehicles, imported cars and motorcycles, high-end mobile phones, eating out at air-conditioned restaurants and cigarettes will become costlier with Finance Minister P Chidambaram deciding to impose higher taxes on these items.

On the other hand, there is good news for ladies as far as jewellery is concerned as they will be allowed to bring more duty free gold items provided they have stayed out of India for more than year.

Moreover, branded apparels will become cheaper as there will be zero excise duty on the item.

Carpets and other textile floor coverings of coir or jute will also become less expensive as they have been fully exempted from excise duty.

In his budget proposals for 2013-14, finance minister P Chidambaram said excise duty on Sports Utility Vehicles (SUV) will be raised to 30% from 27%.

"SUVs occupy greater road and parking space and ought to bear a higher tax... However, the increase will not apply to SUVs registered as taxis," Chidambaram said.

Targeting the "affluent class in India that consumes imported luxury goods such as high end motor vehicles, motorcycles, yachts and similar vessels", he said: "I am sure they will not mind paying a little more."

Subsequently, basic customs duty on new passenger cars and other motor vehicles (high-end cars) costing more than USD 40,000 and/or engine capacity exceeding 3,000cc for petrol run vehicles and exceeding 2500 cc for diesel run vehicles has been hiked 100% from 75% earlier.

Likewise, duty on yachts and similar vessels has also been raised to 25% from 10%.

In a blow to mobile handset makers, excise duty on instruments priced above Rs 2,000 has been raised to 6% but the concessional excise duty of one% and has been kept unchanged in the case of low priced phones.

Smokers will also have to shell out more for their puffs with Chidambaram training his eyes on them for more tax revenues.

"What does a finance minister turn to when he requires resources? The answer is cigarettes. I propose to increase the specific excise duty on cigarettes by about 18%. Similar increases are proposed on cigars, cheroots and cigarillos," he said while delivering the Budget speech.

Eating out at air conditioned restaurants will also become more expensive with the finance minister bringing it under the purview of service tax. At present, service tax of 12% does not apply to A/C restaurants that do not serve liquor.

"The distinction is artificial, and I propose to levy service tax on all air conditioned restaurants," he said.

Homes and flats with a carpet area of 2,000 sq ft or more or of a value of Rs 1 crore will also become more expensive as the rate of abatement for this class of buildings has been reduced from 75% to 70%.

Silk clothes made using imported raw materials will become expensive as customs duty on raw silk of all grades has been increased to 15% from 5%.

Set top boxes will also become costlier with basic customs duty on the item has been increased 10% from from 5%.

However, it is not gloomy all the way with Chidambaram leaving room for some cheer as well.

The duty free allowance on jewellery for an Indian passenger, who has been residing abroad for over one year or a person who is transferring residence to India, has been raised to Rs 1 lakh in case of a lady passenger from Rs 50,000 earlier.

For a male passenger, this has been raised to Rs 50,000 from Rs 10,000.

Moreover, precious stones will become cheaper as the basic customs duty has been cut to 2% from 10% on pre-forms of precious and semi-precious stones.

Branded apparels will also become cheaper as there will be no excise duty on the item. Last year, 10% excise duty was levied on 30% of the maximum retail price (MRP).

Imported hazel nuts will also become cheaper as the customs duty has been reduced to 10% from 30%.

Similarly, dehulled oat grain will also be less expensive as customs duty has been cut to 15% from 30% earlier.


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