Sedans to attract lower excise duty

The government on Wednesday clarified that sedans such as Maruti SX4 and Toyota Corolla Altis will attract a lower excise duty of 27% instead of 30% levy prescribed for SUVs.

The Central Board of Excise and Customs (CBEC) has clarified that these vehicles under the sedan category will not be clubbed under the 30% excise duty applicable to sports utility vehicle (SUVs) like Mahindra Scorpio or the Toyota Fortuner.

As per the new circular, these vehicles would now pay 27% duty meant for other large sedans. "...it is clarified that the afore-cited motor vehicles (Maruti SX4, Honda Civic and Toyota Corolla Altis), which are known as sedans, will attract the excise duty of 27% as applicable to large segment cars," CBEC said in a July 24 circular. Also Read: 30 per cent excise duty on SUVs lacks rationale

The clarification would remove the confusion over the issue and help manufacturers of larger sedans, which have similar technical specifications as that of the SUVs, from paying the higher tax in absence of any clarity. During the budget, the government had increased excise duty on SUVs to 30% having over 1,500 cc engine capacity, overall length more than 4,000 mm and the ground clearance of 170 mm and above.