The 2016-17 Union Budget is finally here. Exercise duty slabs were not reduced by the Finance Minister, rather he further implemented infrastructure tax and luxury tax on cars. The aftermath of this has led to a price hike, ranging from 1% to a maximum of 5% on all cars. Though, what was brought to light was the improving condition of the roads and highways in the country. This directly translates to users now driving their slightly more expensive cars on roads which are not yet in the best condition. FM has redirected a hefty sum of Rs. 97,000 crore towards transforming tarmac. Now one is rendered in a dilemma, as to wait for the condition of tarmac to improve - all the while cruising in their costly cars or whether to move ahead with a reliable used car. Let's find out.
Tax On New Cars
There are two new taxes which have been introduced in the automotive sector, namely Infrastructure tax and Luxury Tax. While Infrastructure tax is applicable on even the smallest of cars, Luxury tax is applicable only on cars which cost more than Rs. 10 Lac. Infrastructure tax has been further divided into 3 categories:
The luxury tax accounts for 1% of the cost of the car, for all cars which cost more than Rs. 10 lac. Let's have a look at a few illustrations to understand this better.
One can eventually conclude that cars are getting costlier, especially the big ones which attract us. Toyota Fortuner, as seen above, will now cost almost Rs. 1.5 Lac more! Whereas our beloved Alto will face a nominal hike of almost Rs. 2,500. The diesel cars are naturally costlier than their petrol counterparts and this Budget has further increased the gap.
Used Cars
Used Cars - a market which grows as rapidly as the new car market. But, the inherent irony lies deeply seated within the fact that when the new car market suffers a setback (like this one), the used car market plunges for an upward swing even further. There are certain advantages of buying a used car. For starters, if you are able to spot a bargain, you could end up owning a car which is easily two segments higher than the allocated budget. Also, since these cars have already gone through the depreciation process, a smart resale of the car will return almost the same cost which was used to buy the car.
Although, all this seems too lucrative. There are certain downsides to this deal. A used car will never give you the satisfaction of a new one. It will always lack the new car aroma and feel. Also, spotting a needle in the haystack of used cars is a gruesome task and needs some experience along with ample education in this certain field. If not purchased smartly, these cars can be a curse to live with.
Verdict
Cars are getting costlier day-by-day, courtesy improved technology and safety features along with the added tax burden imposed by the Government. If you indeed have the money and are not affected by the inflation of prices, then gladly go ahead and get yourself a brand new car. Even if this hike means buying a lower variant, go for a new car.
But, If you are open to the subject of an old car and have been on a constant hunt for one, now is the perfect time. Not only will you pay less and get a lot more value for your money, you will also be exempted from the price hike. And when you finally sell the car after a few of years, you will get almost all your money back and the Rs. 97,000 crore investment would have also by then yielded better road conditions for you new car. So, grab an expert and treat yourself to a shiny new Used Car.
