Excise Duty Relief For Rural Utility Vehicles Expected In Budget 2011


Rural utility vehicle or vehicles meant for rural markets are the most essential sort of vehicles needed by almost every developing and developed nation. Vehicles like tractors, farm equipments are the basic means of cultivating, harvesting and transporting goods from the fields to the actual market and hence are very important.

Currently utility vehicles carry an excise duty of as high as 22% which is equal to what certain luxury cars like BMW X1 and Chevrolet Captiva carry and therefore are less attractive for rural people who intend to buy these useful vehicles.


image credit- Flickr

Moreover it has been a topic of debate for the government and recently this is what an official belonging to the heavy industry said, “There is a consensus to subsidize some specific vehicles that have a mass market in rural areas. We have been looking at options to de-classify these from other vehicles that are in highest tax net so that rural users can enjoy competitive prices like tractors and other farm equipment ,”

Going back in 2006-2007 the Government had drastically reduced the duty on small cars to 16% and 24% for vehicles under 4 meters and with 1200CC & 1500CC engines respectively, only to boost the sales and it actually helped it achieving the same.

This step taken by the Government in 2006 & 07 propelled the sales of such small cars to an unexpected level eventually expanding the domestic market to over 2 million units per annum. Finally the Heavy Industry has put am argument on the tax being demanded on vehicles and we expect to see a favorable decision on this soon.