Car prices go up with levy of luxury tax, Krishi Kalyan cess

Mumbai: Prices of cars have gone up with the imposition of tax related measures announced in the Union Budget – 2016. Apart from the Krishi Kalyan cess, a new luxury tax also came into effect from June 1.

In February, Finance Minister Arun Jaitley had in the budget speech proposed to collect tax at source at the rate of 1 per cent on purchase of luxury cars exceeding value of Rs.10 lakh.

The luxury tax has to be collected by the dealer and will be added to the ex-showroom price of the vehicle. Popular vehicles such as Toyota Innova Crysta, Mahindra XUV500, Mahindra Scorpio, Toyota Fortuner and some variants of Hyundai Creta, Honda City will be affected by this move. Customers will have to shell out more to buy these vehicles.

However, the customers can get the refund of the luxury tax if they are eligible. The TCS (Tax Collected at Source) certificate issued by the dealer on paying the luxury tax will entitle the customer to get the tax amount refunded by filing his Income Tax Return for the said financial year.

In a yet another move on the tax front, all the vehicles – cars and bikes will be impacted marginally with the hike in the service tax from 14.5% to 15%. 0.5 per cent. The Krishi Kalyan cess is aimed at financing initiatives relating to improvement of agriculture and welfare of farmers.

Credit: http://www.vicky.in