Budget 2016: Buying cars gets costlier for you – ETAuto.com
“1% additional tax will be charged on luxury cars above Rs 10 lakh,” Jaitley announced. In a move aimed at checking pollution and encouraging use of hybrid cars, FM Jaitley also announced that a 1% infra cess will be levied on small petrol cars. A 2.5% infra cess will be imposed on diesel cars.
Jaitley also said that a 4% additional levy will be imposed on high-capacity passenger vehicles and SUVs.
According to CRISIL, “The additional 2.5-3.5% cess will further pull down demand for diesel cars & SUVs. Currently, 40% of total passenger vehicle sales are of diesel vehicles.”
The increase in levy has come at a time when there has been a lot of noise about growing levels of pollution in the country. The Supreme Court too in December 2015 had banned sale of diesel vehicles with engines of 2000 cc and above in the National Capital Region till March 31,2016.
Not all is bad news though! In a move that will bring major cheer to the common man, Jaitley announced that the tax relief on House Rent Allowance (HRA) will be raised from Rs 24,000 per annum to Rs 60,000 per annum.
Also, those earning up to Rs 5 lakh a year will now get a tax relief of Rs 5,000, up from Rs 2,000 previously. This hike in relief effectively raise the basic exemption for these taxpayers to up to Rs 3 lakh. The relief was introduced in budget 2013 and was retained in the past two budgets.
From focus on agriculture to tax and financial sector reforms, Jaitley outlined nine pillars to transform India: Agriculture and farmer welfare with an aim to double farmers’ income in the next five years; Rural sector; Social sector including healthcare; Educational skills and job creation to make India a knowledge based and productive economy; Infrastructure investment to enhance quality of life; Financial sector reforms; Governance reforms and ease of doing business; Prudent management of government finances and Tax reforms to reduce compliance burden.
(With inputs from Sharmistha Mukherjee)