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The higher value added tax (VAT) rate on passenger cars in Punjab compared to Chandigarh is acting as a deterrent to the sales of luxury car in the state. Considering the higher taxes, which is 1.25 per cent higher than that in Chandigarh, the potential buyers, who has residence proof of Chandigarh in addition to Punjab prefers to purchase the vehicle and get it registered from Chandigarh rather than Punjab.
It is worth mentioning that the VAT levied in Chandigarh is 12.5 per cent on the cost of the vehicle while in Punjab it is 13.75 per cent. The difference of 1.25 per cent seems to be nominal in case of normal cars but in case of luxury cars, it is huge.
Speaking to Business Standard, Deepak Joshi, managing director, Joshi Autozone (P) Ltd, said, " There are many customers of ours having houses in Chandigarh as well as in Punjab. Due to difference in taxation i.e 1.25 per cent, many customers prefers to purchase the vehicle and get it registered from Chandigarh rather than Punjab." Joshi Autozone is authorized Mercedes Dealer having dealership in Chandigarh, Ludhiana and Jalandhar. Buoyed by the response from the customers, it opening bigger facilities in Chandigarh. He added that due to this, many customers prefer Chandigarh over Punjab to purchase the car.
It is pertinent to mention here that in case the vehicle is purchased from Chandigarh and registered in Punjab, the buyer has to pay the difference in taxes to the respective state registering authority. On the other hand if it purchase it from Chandigarh and get it registered then the buyer can save the VAT i.e. 1.25 per cent, but in this case the vehicle could be registered only if the customer has Chandigarh address proof.
Punjab is an important market for the luxury car makers, as dealers say there is no dearth of discerning buyers for Luxury cars in Punjab. Buoyed by the response, the luxury car makers has very high expectation from Punjab market and further in order in tap the burgeoning demand, the car makers has expanded their base by opening new dealerships. Mercedes Benz sold 233 cars in Punjab and Chandigarh in first six months of the current year which is more or less same as compared to corresponding period of last year.
Besides Mercedes, many other luxury car makers like BMW, AUDI, Volvo etc have expanded their operations in Punjab and Chandigarh. BMW and Audi has dealers in Chandigarh and Ludhiana. Similarly Nissan and Volvo has also expanded base in Punjab and Chandigarh.
The expansion of network by the manufacturers clearly suggests that Punjab is emerging as major market for the luxury car makers. Even, buoyed by the response from Indian market especially Mumbai and Delhi, British luxury car maker-Aston Martin last year announced that it is targeting Chandigarh and Punjab, also considered as one of the biggest market for luxury cars.
