Country's popular car-maker Honda has stated a fact in stark humor in relation to the Indian taxation policies. Mid last week Honda Cars India Ltd (HCIL) said that there is a 'High' incidence of taxation on the automobile sector and added, “cars are more taxed than cigarettes” in the country. Currently the tax policy ranges somewhere in between 50 - 70% depending on cars.
Jnaneswar Sen, Senior Vice President (Marketing and Sales), Honda Cars India Ltd (HCIL), said, “Today if you look at incidence of taxes on car whether it is excise duty, CST, calamity tax, education cess, VAT, road tax..if you look at all these taxes on car, probably cars are more taxed than harmful things like cigarettes... taxation is extremely high.” Reportedly highest tax of about 65% is levied. Moreover, he emphasized on confusion arising due to no uniformity in taxation policy across states in the country.
Citing an example Sen said, “If we are selling car at Rs 100, which is coming from a factory, customers are probably purchasing at Rs 150 to Rs 175 due to most of these taxes. Except transportation cost and dealers margin, the rest is tax which is 50-70 per cent.” Speaking on the taxation policy he added, “In some states, VAT rate is 12.5 per cent and in some other places, it is 14.5 per cent. Road tax is 4% at one place and it is 16% in other places.”
Speaking on fuel variants, Sen said, “Because of lack of clarity on (the issue of) subsidy on diesel..will it (subsidy) continue or will it not... There is no clarity. We have invested in diesel cars but many people (players) are thinking whether to invest or not (in diesel). What will happen we do not know. What will happen to CNG we do not know. Fuel policy is directly impacting car industry. Car industry which runs on both petrol and diesel and its mix is determined by prices of petrol and diesel. How much we produce diesel and petrol..(fuel) prices are changing every month. The ratio of petrol and diesel (cars) is changing every month.”
