Small cars to get pricier as government bumps up overall excise duty by 2%

Indian car market is definitely dominated by the small cars and with the arrival of Union Budget 2012-13; this domination might just trickle a little. Along with the executive sedans, large cars and other luxury cars, even small cars will get expensive. According to the Union Budget 2012-13, an extra 2% excise duty will be levied on passenger cars, currently, the total excise duty stands around 10%, but with this 2%, it comes out to be 12%. Because of the aforesaid hike in the total excise duty, the prices of the small passenger cars will be bumped up as the car makers will now pass on this hiked duty to its consumers.

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Incidentally Honda, Mahindra and Mahindra and Maruti Suzuki have already made an announcement regarding their plan of passing on the hike in the excise duty to its consumers. Hopefully, they will make it official by the end of the day. As per the Union Budget 2013-14, the excise duty of 22% has been intensified to a whopping 24%, which in turn will increase the prices of SUVs, MPV, sedans and other luxury cars longer than 4 meters in length.

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However, the speculated tax on diesel cars was thankfully not announced in the proposed budget that was presented today. This will give a bit more freedom to the Indian car industry. Some of the most loved small cars in India comprise of Maruti Alto, Maruti Wagon R, Hyundai Eon, Toyota Etios Liva, Maruti Zen Estillo, Hyundai Santro and Tata Nano.