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Taxes in Buying New Car in India

 

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Buying a New Car worth Several Lakh, Know Taxes Paid to Government Including Post Purchase Taxes

Prices of Some Models

» Toyota Fortuner – On Road is now 30 Lakh+

» Honda City Diesel – Price Range is from 10 Lakh to 14 Lakh

» Premium Diesel Hatchback – Polo and Elite I20 now cost 8 Lakh+

» No Car as of now is under 5 Lakh Price (On road) in Indian car market which has ABS and Dual Airbags as Safety Specs

To find out the Taxes 

Apart from paying Tax on procuring parts from Vendors –

» Excise Duty is Component of Ex-factory Price

» VAT and Entry Taxes are Charged and is Component of Ex-showroom Price

» State Road Tax is charged and is component of On Road Price of Vehicle

Taxes at Time of Buying Car

Component Rate Classification Beneficiary
Excise Duty 12% Small Cars under 4 Meter Central Government
24% Cars with Length > 4 Meter and Engine < 1.5 Lit,
27% Cars with Engine > 1.5 Litre
Infrastructure Cess (Budget 2016) 1% Petrol Cars with < 1.5 Litre Central Government
2.5% Diesel Cars
4% High Capacity Cars
VAT 12.5% to 14.5% State to State irrespective of Vehicle Class State Government
Road Tax 3% to 24% Based on Vehicle Pricing – Differential in every State State Transport Department

Taxes as Part of Ownership (Post Purchase)

Component Rate Classification Beneficiary
Taxes on Fuel 33% to 50% Goes to Center and State Both Central & State Govt
Service Tax on Insurance Premium 12.36% Goes to Center Central Govt
Service Tax on Labor Charges 12.36% Goes to Center Central Govt
VAT on Spare Parts – Tyre, Battery, Spare Parts Applicable VAT Goes to State State Govt
Service Tax on Loan Foreclosure 12.36% Goes to Center Central Govt

Rebates

Top of it for Salaried – there are no Income Tax Rebates or Deductions for Owning a car or Interest Payable on Car Loan , for Self Employed – yes if the vehicle used for business purpose – they can claim depreciation as non cash expense

DeMystify Prices of Cars

  Maruti Swift Vxi Honda City SMT Diesel Toyota Fortuner 4×4
Exshowroom 526323 940500 2549429
Insurance 16000 24848 78000
Road Tax with MCD Parking Fees, Number Plate & Smart Card 23219 87244 323000
Logistics 6000 6250 6250
On Road 571542 1058842 2956679
Tax Component
Excise + VAT 90000 210000 625000
Road Tax 18219 82293 318000
MCD Parking Fee 4000 4000 4000
Service Tax on Premium 1900 2800 10000
114119 299093 957000
On Road Price without Tax 457423 759749 1999679
Taxes Paid 114119 299093 957000
Tax Proportion 24.95% 39.37% 47.80%

Fuel Taxes as Running Cost

Kms Driven Avg Mileage Litre Used Fuel Bill Taxes Proportion
70000 Kms Driven – Petrol Car 14 Kmpl 5000 Lit 300000 150000
100000 Kms Driven – Diesel Car 17 Kmpl 6000 Lit 300000 120000
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