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Maruti SX4 and Toyota Corolla Altis may get cheaper as the Revenue Department on Wednesday clarified that these car models will not attract higher excise duty.
The Central Board of Excise and Custom said these models, which are known as sedans, will attract 27 per cent excise duty, as applicable to large cars and not 30 per cent, as announced in the Budget.
This comes after the motor vehicle manufacturers sought clarification as to whether the excise duty of 30 per cent is applicable on these sedans.
The Budget had raised excise duty to 30 per cent on sports utility vehicles (SUVs) with engine capacity of over 1500 cc, length exceeding 4000 mm, and having a ground clearance of 170 mm.
Though the two vehicles fall under these specifications they are called sedans and not SUVs.
Though Maruti SX4, Honda Civic and Toyota Corolla Altis satisfy all the three conditions, the Board said that they are known as sedans in trade and common parlance and not as SUVs.
The CBEC clarification will provide some relief to car manufactures facing a drop in sales on account of overall slowdown.
The auto industry has also been demanding a reduction in duty on SUVs to 27 per cent, which till recently was the fastest growing segment.
Commenting on the development, Jnaneswar Sen, Senior Vice-President, Sales and Marketing, Honda Cars India, said it would lead to the prices of these cars dropping by around 3 per cent.
shishir.Sinha@thehindu.co.in
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