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A taxing drive

Did you know that buying an Amby was once considered “conspicuous consumption” and the excise on cars was as high as 60%? Here is a chronology of Excise duty rates on motor cars.

Print Edition: August 9, 2009

Did you know that buying an Amby was once considered “conspicuous consumption” and the excise on cars was as high as 60%?

1984
An Idea Is Born:
The Maruti Suzuki era begins, and so does the government’s awareness of tax possibilities. In Budget 1983-84, Finance Minister Pranab Mukherjee converts the excise structure for cars to an ad valorem-cum-specific rate, based on engine capacity and fuel used.

1986-87
Cars Classified:
FM, V.P. Singh, hikes duties on fuel-efficient and nonfuel-efficient cars to a total of 25 per cent and 35 per cent, respectively.

1989-90
Declassified:
Fuel-efficient cars? Enough! Tax every car equally at 35 per cent, says FM, SB Chavan. The revenues raised? A majestic Rs 100 crore. Today that will fetch just 20 Maybachs.

1991-92
Tax’em All:
You want a car, a fridge and an AC? That’s “conspicuous consumption”. FM Manmohan Singh raises tax on cars to 60 per cent.

1996-97
Car Tiers:
New FM, P. Chidambaram, discovers excise rates on cars are "not in consonance"with accepted norms. Cars taxed at 40 per cent and MUVs at 20 per cent.

2001-02
Good Tidings:
Yashwant Sinha reduces special excise on cars. Total duty is 32 per cent. Cars and aerated drinks are in the same class!

2003-04
One Tax Fits ‘em All:
Finance Minister Jaswant Singh is sick of the multiplicity of rates. Taxes on cars come down from 32 to 24 per cent.

2008-09
Small Is Cool:
Taxes on small cars are lowered to 12 per cent. Government creates a slab of 24 per cent plus a flat Rs 15k for cars and MUVs between 1500cc and 1999cc.

2009-10
Buy Buy:
Rates are lowered further to 8, 10 and 20 per cent. Taxes on cars above 2000cc lowered.

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