Automobile Budget 2018: High Growth in Luxury Car Segment Make Manufacturers Wary of Additional Taxes
New Delhi, Jan 22: While other sectors are expectant of sops, the manufacturers of luxury cars are worried as they fear the government might levy additional taxes on the segment in Budget 2018. The reason for the apprehension is that the segment has shown massive growth this year– it has broken the record of previous five years.
In 2017-18, the segment saw a whopping growth of 17 per cent, selling 39,000 cars. In 2016, the segment had seen an 8 per cent dip following a ban on big luxury diesel cars. The growth the segment witnessed came when companies lowered the prices before the implementation of the Goods and Services tax in June. Luxury cars pay total tax to the tune of 53 per cent.
The dealers gave discounts ranging from Rs 2 lakh to Rs 9 lakh, keeping the momentum in the final quarter. Despite high tax, the segment clocked a decent growth.
The companies say that luxury cars already pay the most tax compared to all the segments and any fresh hike may hamper growth. The government cannot change the Goods And Services Tax rates implemented on luxury cars without the nod of the council, it can propose new taxes and cess.
Luxury cars maker Volvo has seen 28 percent growth in sales. It said that the luxury car segment is just 2 percent of the total industry and there was a huge potential for growth in the coming years.
Finance Minister Arun Jaitley will announce the Budget on February 1.