The Finance Minister Arun Jaitley announced a 1-4 percent infrastructure cess on cars across categories, as he presented the Budget for 2016-17 on Monday. Citing that the pollution and traffic situation in Indian cities is a matter of concern. The FM proposed to levy a cess, of 1 percent on small petrol and CNG cars, 2.5 percent on diesel cars of certain capacity and 4 percent on other higher engine capacity vehicles and SUVs.
There will also be a tax collected at source of 1 percent on purchase of luxury cars exceeding value of Rs 10 lakhs. While the cess was not predicted, the automobile industry had a fairly crisp list of expectations to ease off the pressure on business. Firstly, reduction in excise duties or at least simplification of the taxation structure by merging certain duties, eliminating multiple levies and varying rates across vehicle categories.