Cars, TVs & other durables to be costlier from January as government ends excise sop

Prices of cars and durable goods like TV and fridge will go up from Thursday as government plans to end the excise duty concessions given in February, a decision that may help rake in Rs 1,000 crore in the remaining three months of the fiscal.

"The government is not extending the excise duty concessions on the auto sector and consumer durables," a senior finance ministry official said.

The decision could help the government raise additional revenue of up to Rs 1,000 crore in the remaining three months of the current financial year in a bid to achieve the fiscal deficit target of 4.1 per cent of GDP. But the additional yield will depend on the auto and white goods sales in those three months.

The previous UPA government, in order to boost the two sectors that were struggling in the wake of economic downturn, had cut excise duty on cars, SUVs, two-wheelers and consumer durables in the interim Budget in February this year.

Excise duty on small cars, scooters, motorcycles and commercial vehicles was reduced to 8 per cent from 12 per cent previously. For SUVs, it was cut to 24 per cent from 30 per cent; for mid-sized cars, to 20 per cent from 24 per cent and to 24 per cent for large cars, from 27 per cent.

In the consumer durables sector the excise was reduced to 10 per cent from 12 per cent.

In June, the new government led by Prime Minister Narendra Modi extended the excise duty concessions by 6 months to December 31, which is now not being further extended.

While companies are still awaiting a formal communication and working out on the subsequent details of price hike, Honda Cars India Senior Vice-President (Marketing and Sales) Jnaneswar Sen told PTI: "Prices will go up as a result of this decision. This move will also impact demand in the short- term."

Expressing similar views, Maruti Suzuki India Chairman R C Bhargava said: "It is a government decision. We don't have any option but to accept it. It will have an impact on sales.

I believe sales will slow down in the short term due to this development." 

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