The CKD unit excise duty confusion has been finally cleared by the Indian Government and has redefined it. Earlier there was a lot of confusion regarding the duty that will be attracted by car components being imported by expensive automakers such as BMW, Mercedes-Benz and Audi, which now is completely transparent from the government’s end.
Let us see the percentage of tax imposed by the government and on which articles:
- According to the finance ministry, vehicles imported as CKD kits with pre-assembled engine, gearbox, etc. will attract a duty of 60%
- On the other hand if these components are imported separately for local assembly then they will incur duty as low as 10%
So from now onwards cars from all the leading manufacturers of expensive and luxurious products will cost almost the same provided they keep shipping these components the way they were being. Manufacturers like Toyota, Volkswagen, Honda etc. may continue selling their products at current prices however sedans such as BMW 3 series, Mercedes C Class and Audi A4 are likely to get affected by it.
So the bottom line remains that vehicles coming as CKD kits will have an edge over the CBU unit product which attract duties as high as 110%. After the proposal made by Pranab Mukherjee, a lot of discontent is being shown by automakers and now we need to wait and watch what happens next.