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Pay more for your car

delhi Updated: Mar 22, 2011 02:03 IST
Atul Mathur
Atul Mathur
Hindustan Times
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Your favourite diesel sedan and multi-utility vehicle may just get costlier.

Sources said Delhi government has worked out a proposal to increase value-added tax (VAT) on luxury diesel-run cars. Sources said registration tax on high-end luxury cars - both diesel and petrol - may also go up.

Sources said Delhi chief minister Sheila Dikshit would make these announcements while presenting her first budget as finance minister.

According to sources, the government is likely to increase VAT on diesel cars from 12.5% to 20%. With a large number of people preferring to buy diesel-run cars, senior Delhi government officials believe that the increase would not just help the government earn more money but also discourage people from buying diesel-run cars.

Though Delhi government had increased registration tax on both cars and two-wheelers last year, sources said the government may once again increase registration tax on luxury cars from the existing 10% to 13%.

"If a person can afford a super-luxury car, he should not have problem in paying more taxes to the government too," said a highly placed source in the Delhi government.

VAT and registration tax on smaller cars is likely to remain untouched.

With 65 lakh registered vehicles, Delhi has more vehicles than total number of vehicles in Mumbai, Chennai and Kolkata put together. More than 1,000 new vehicles are registered in Delhi every day that include 250-300 cars.

Presenting her first budget in 12 years in the government, Dikshit has already indicated that social sector would be her government's priority.

With improved tax collections this year - thanks to increase in circle rates, excise on liquor and registration tax on vehicles - sources indicated that government may increase subsidy on kerosene, LPG and essential commodities.

Dikshit said, "The budget will be liked by mothers and housemakers."