Average cost of cars to increase significantly

According to Ganwani, the cost of reconditioned vehicles will sharply rise. For a mid range car such as a Nissan Sunny, the price will increase by approximately Rs 65 – 70,000 rupees while in the case of a top end car, the cost increase will be about Rs120 – 125,000 rupees.

Revisions in the current duty structure for all imported vehicles will significantly increase the cost of average cars with effect from tomorrow due to a new five percent levy being introduced.

This tax, not calculated on the cost of the vehicle but on the depreciated value of the vehicle, would have a cascading effect on the calculation of the excise duty and the VAT, industry sources said.

Although an individual pays five percent, the additional amount becomes part and parcel of the amount that goes into the calculation of the excise duty and it also becomes part and parcel in the addition of the calculation of the VAT. "What we have seen is that there is an increment in the duty," said Ashok Ganwani of Lekhraj & Sons, one of the largest car importers in the country.

According to Ganwani, the cost of reconditioned vehicles will sharply rise.

For a mid range car such as a Nissan Sunny, the price will increase by approximately Rs 65 – 70,000 rupees while in the case of a top end car, the cost increase will be about Rs120 – 125,000 rupees. For a jeep such as a Pajero, the cost increase will be about Rs 150,000 rupees and around Rs 45 – 50,000 rupees for a small car. (NG)