‘High road tax to hit car sales’

Some states in India are raising road tax and that is going to discourage people from buying cars. Haryana has kept road tax of 2 per cent on cars costing up to Rs 5 lakh,4 per cent on cars between Rs 5 to Rs 10 lakh,6 per cent on cars costing more than Rs 10 lakh up to Rs 20 lakh and 8 per cent on cars valuing over Rs 20 lakh.

The country’s largest passenger car maker Maruti Suzuki today said that car sales will be will be hit by the increase in road and registration taxes announced by several states in the country.

“Absolutely,it (high road tax) will adversely affect car sales,” the company’s Chief General Manager,Shashank Srivastava told reporters here today when asked about increase in road tax affecting sales.

However,he did not elaborate how much the dent would be. “It is very difficult to tell about it,” he said,adding that states like Karnataka,Tamil Nadu and Delhi have also raised their road tax rates.

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The matter assumes significance as states like Haryana and Union Territory Chandigarh raised their road tax last month substantially while Punjab is also mulling to revise its lump sum tax on sales of vehicles.

Compared to earlier road tax rate of just Rs 2,500 for a four wheeler,Chandigarh now levies 2 per cent tax on cars costing up to Rs 6 lakh,3 per cent on cost of vehicles between Rs 6 lakh to Rs 20 lakh and 4 per cent on cars costing above Rs 20 lakh.

Similarly,Haryana has kept road tax of 2 per cent on cars costing up to Rs 5 lakh,4 per cent on cars (priced) between Rs 5 to Rs 10 lakh,6 per cent on cars costing more than Rs 10 lakh up to Rs 20 lakh and 8 per cent on cars valuing over Rs 20 lakh.

Significantly,Punjab,Haryana and Chandigarh are the potential markets for Maruti as it sells 8,000 cars per month in these markets constituting 9 per cent of its total sales.

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“Road tax is one of the major constituent of owning a car and it is rather very important when small cars account for 75 per cent of total passenger cars in the country,” he said.

Besides,rising fuel prices and interest cost are also major irritants in the growth of automobile sector. “There is a resistance in terms of growth…due to higher interest cost,fuel price hike..and these factors are bound to affect the demand for cars,” he said.