Click to play videoNew Delhi: Meet Hariharan, one among thousands of Indians keen to drive the Maruti Alto, India's fastest selling car. But what is keeping him away from his dream of owning first four-wheeler?
It's the price tag. The car is actually priced at a little less than Rs 2 lakh if you look solely at its manufacturing cost. But dreams don't come cheap.
Maruti says it has to pay over Rs 3,900 or 2 per cent of its cost as a Central Sales Tax. Beside that it pays an eight per cent excise duty adding another Rs 15,800 to the cost. All these costs then pile on to your car.
If he decides to shell out all that money at the showroom, Hariharan will also pay an additional 10 per cent or Rs 20,000 as Value Added Tax.
But here's the catch - the bigger the car, the higher the excise duty. Two budgets ago, the Government reduced the excise duty on small cars but kept it the same for bigger ones.
So will the Finance Minister Pranab Mukherjee further cut taxes and make people like Harharan's dream even more affordable this budget?
Expectations are high and industry analysts say the Government should further continue the sops which it started in December 2008 to stimulate the sector hit by credit crunch.
"The excise duty was cut to eight per cent from 10 per cent earlier and this helped the industry recover by about 10 per cent. The industry also expects the Finance Minister to reduce the Central Sales Tax by another percentage point. It also wants the Government to continue with its excise duty concession, which was to expire on March 31. We hope it will be extended till March 2013," says former Managing Director of Maruti Udyog Limited, Jagdish Khattar.
Being able to buy a car isn't just about a lower price tag, it's about consumers being able to spread their expenses. So, enter the world of bank loans. Since December, the RBI has cut repo and reverse repo rates three times signaling banks to cut interest rates. But banks have not really cut their interest rates on auto loans.
Cars form a big part of consumer spending - at least in value terms - and all eyes are on Pranab Mukherjee to see if the first budget of the term will drive more people to vehicle showrooms.
(For updates you can share with your friends, follow IBNLive on Facebook, Twitter and Google+)
 |
 |
 |
|
displayed with permission. Use of the CNN name and/or logo on or as part of CNN-IBN does not derogate from the intellectual property rights of Cable News Network in respect of them.