"SUVs occupy greater road and parking space and ought to bear a higher tax. I propose to increase the excise duty on SUVs from 27% to 30%. However, the increase will not apply to SUVs registered as taxis," Finance Minister P Chidambaram today said in his Budgetary proposals.
Stating that the affluent class in India consumes imported luxury goods such as high-end motor vehicles, motorcycles, yachts and similar vessels, Chidambaram expressed confidence that "they will not mind paying a little more".
"Hence, I propose to increase the duty on such motor vehicles from 75% to 100%," he added.
Chidambaram also proposed to hike the import duty on motorcycles with engine capacity of 800 cc or more to 75% from 60%.
"...And on yachts and similar vessels from 10% to 25%," he added.
To boost manufacturing and selling of environment-friendly vehicles, Chidambaram proposed to continue and extend the currently available concessions on specified parts of electric and hybrid vehicles till March 31, 2015.
In Budget for 2012-13, the excise duty on specified parts of hybrid vehicles was reduced to 6% from 10%.
Excise duty on lithium ion battery packs for electric or hybrid vehicles was also cut to 6% from 10%.
Besides, the full exemption from basic customs duty and special CVD with concessional excise duty or CVD of 6% on some parts of hybrid vehicles was extended to specified additional items and lithium ion batteries imported to make battery packs for electric or hybrid vehicles.