Why Luxury Cars are So Expensive in India

When it comes to buying a car, there are many factors to consider. From the type of car you want to the cost of ownership, it can be a daunting task. But one of the most important factors to consider is the cost of the car itself. In India, luxury cars are often more expensive than in other countries, such as the United States.

But why is this?The answer lies in the taxes and duties imposed on cars in India. For cars that are imported completely as fully built units (CBU), taxes are set at 100%. This is why so many luxury cars sold in India push the 1 crore rupee mark. In addition to import duties, there is also GST (Goods and Services Tax) which ranges from 29 percent to nearly 50 percent, depending on the car and engine.

Vehicles with a gasoline engine of less than 1.2 liters and a length of less than four meters are subject to a combined tax of 28 percent GST and one percent CESS, for a total of 29 percent. This fee varies from vehicle to vehicle, depending on its length, fuel type and engine size. You also pay excise taxes on the fuel you use for your car, which ranges from 35 to 45 percent of the price of fuel. When you renew your insurance, have your car repaired, or buy parts and accessories, you'll have to pay 18 percent of GST. Parts imported under the CKD (Complete Knock Down) system are also subject to high taxes.

Import duties are calculated at 30% for engine or gearbox mechanisms that are pre-assembled but not mounted on a chassis or body assembly. Engines, gearboxes and transmission mechanisms that are not pre-assembled are subject to a 10% import duty. All these taxes and duties add up quickly and make luxury cars much more expensive in India than in other countries like the United States. For example, the Toyota Camry and Skoda Superb are 120% more expensive before they reach buyers in India. While the Dzire is the best-selling sedan in the country and is very affordably priced, the Camry is aimed at those looking for a luxury car and only sells around 100 units each month.

Minnie Langehennig
Minnie Langehennig

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