Government slaps 2% extra tax on large cars, no additional tax on diesel cars

Pranab Mukherjee, the finance minister of the country after all managed to hit the already struggling passenger car industry. The government has increased the excise duty by 2 percent which will be passed to the public tonight and is sure to depress the sentiments that are already weakened. The excise duty on large cars has been increased from 22 to 24 percent. To the much relief of the Indian auto industry, the finance minister has not imposed any additional tax on the diesel cars. Experts suggest that the increase in the excise duty will surely affect the demand of cars. The two-wheeler industry is also expected to be affected by this increase in duties and so the trucks segment which off late has been exhibiting deceleration.

The fuel prices have been raised by almost Rs.14 over the last couple of years. The sales of passenger cars have been affected with the increase in fuel prices resulting in a growth as small as 2.95 percent from April to February this year. Not only the customers but the car makers too have been staggering under the increasing fuel prices and the higher rates of interest. For some major car companies today’s day did not start well with the share prices being in red. However, the day would not end on the same note since the figures have taken a green turn after the finance minister Pranab Mukherjee’s decision of not imposing an extra tax on the much favored diesel cars. The Maruti Suzuki’s share price has gone up by 0.26 percent, the Tata Motors saw a rise of 0.55 percent in its share prices and the M&M share prices recorded a dramatic rise of 2 percent.