It looks as if the year 2012 is the taxing year for the car market of India. The automobile market that had not yet recovered completely from the injuries of the raised excise duty has to face yet another fresh bruise from the state government of Maharashtra. The Maharashtra state government has declared a hike of 2 per cent tax on the petrol fuel based cars while a hike in tax of 4 per cent has been imposed on the diesel fuel based cars. The good news here is that the CNG powered vehicles will cherish the deduction of tax by 2 per cent. This increase in the excise duty will slow down the already snail paced growth of the automobile market of India.
This increased rate of tax will put in a big hole in the pockets of the customers while the manufacturers are not suppose to raise the price of their products as this additional duty is levied over the ex-showroom price tag of the vehicles. This is a very evident fact that the state of Maharashtra is the home of many car manufacturers as well as it accounts for a major portion of the sales figure across the nation. 50 per cent of the sales of cars done in the state of Maharashtra come from the metropolitan city of Mumbai alone. It clearly looks like the state of Maharashtra has joined the bandwagon of the states like Andhra Pradesh and Karnataka who have already worked upon the increased duty which has made their cars costly in these two regions. Other states may as well follow suit to unburden their treasury from the weight of fiscal non-productivity.
The raised excise duty by the Maharashtra state government may not very well go with the residents and they may choose to purchase the cars from the dealers outside the state of Maharashtra and then bring it back to the state for the necessary vehicle registration procedures. However, that would cost a little more than the usual amount spent on the registration of the vehicle for the vehicle has to be first granted an NOC from the DTO under whose jurisdiction the dealer falls. However, this methodology will still be cheap in comparison to the purchase of a vehicle within the state of Maharashtra.
There won’t be much option for the luxury car purchaser in Maharashtra as he has to get it from the dealer in the state as buying the luxury cars such as the models of Audi, Porsche, Mercedes-Benz etc from other state would be a costly affair. That would be bit stressful as well, for the vehicle has to be purchased and then brought down for usage by road transportation. Driving it down may be an option, but that is risky too. An additional excise duty of 2 per cent to 4 per cent will not hamper the rich and famous to realize their choice of luxury as well as super luxury vehicles. But on the middle class consumer this rise in excise duty will be very heavy in the state of Maharashtra.