Cars are Taxed More than Cigarettes in India: Honda Cars

Car major Honda Cars India Ltd (HCIL) today said there is a "high" incidence of taxes on automobile sector, saying "cars are more taxed than cigarettes" in the country.

"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," company's Senior Vice President (Marketing and Sales), Jnaneswar Sen told reporters here.

Sen said incidence of tax might be ranging between 50-70 per cent depending on cars.

Citing an example, he 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."

He also rued about the fact that there was no uniformity in rates of taxes in the states.

"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 per cent at one place and it is 16 per cent," he said.

Sen also underscored the need for more clarity on the subsidy being given on diesel.

"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," he said.

"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," he said.

He further noted that the excise duty cut announced by Centre in the month of February this year had failed to bring growth in automobile sector.

"The current government (at Centre) reduced excise duty in February but there is still no growth. Market sentiments are not positive. Customers are still waiting and postponing the purchase of cars," he said.

Sen said the industry wished stable government at the Centre which should bring stability in policy.

On the issue of recalling of cars, Sen said, "It is an issue of miss assembly. There is no complaint so far from customers. We expect only 3,000 cars would require any change of parts." .