The Union Budget of 2013-14 did not bring a lot of smiles on the faces of the people in the automobile industry as the SUVs had their excise duty being increased from 27 percent to 30 percent. The government claims that SUVs occupy a larger footprint than usual cars and they should be taxed at a higher rate. But we are Indians and finding a way around to pay a lesser tax is something we have an expertise in and Mahindra has just come up with a way to have its cars taxed at a lower rate. As we reported earlier, entry level SUVs are expected to tweak with dimension to save tax.
The Government classifies the SUVs as cars which have an engine capacity of more than 1.5 litres i.e. 1,500cc, a ground clearance of more than 170 mm and have a length greater than 4 metres. This way any luxury SUV which has a ground clearance of less than 170 mm is eligible for the 27 percent excise duty and the cheaper SUVs which are made to suit the Indian roads get taxed at the rate of 30 percent.
The cheaper cars which we can buy become costlier and the ones which are out of the reach of majority of us, remain at a lower duty. But Mahindra has found a way around it and is believed to be reworking on the ground clearance of its SUVs which will bring the ground clearance below 170 mm and the SUVs from the company, which form the majority of the vehicles from their lineup will then get taxed at a lower rate of 27 percent instead of 30 percent.
Companies such as Tata Motors, Mahindra and Force Motors are the ones which have been worst hit by the excise duty hike but the Government’s policy has a glitch and the automobile manufacturers in the country will try to take full advantage of that issue. Decreasing the ground clearance to just under 170 mm will make the SUVs getting taxed at a lower rate and the cars will stand tall enough to ride easily over the Indian roads.