The government is considering a significant increase in withholding tax on new car purchases. This proposed change is not just a flat increase; it’s a percentage-based hike that will impact cars with an engine capacity ranging from under 850 cc to 2000 cc.
Take the Suzuki Alto, for instance. Currently, if you buy this car for Rs. 2.5 million, you’re looking at a withholding tax of Rs. 10,000. But with the proposed tax rate, that amount could jump to Rs. 25,000. This means car prices could rise across the spectrum, hitting even the most budget-friendly models.
The auto industry, already grappling with sluggish sales due to rampant inflation, could face further challenges. Despite various incentives and deals to attract buyers, the potential tax increase could deal another blow to an industry already on shaky ground, exacerbating the country’s economic woes.
Even electric vehicles (EVs) aren’t exempt from this proposed change. The government is considering rolling back tax exemptions for EVs priced above $50,000, which would include high-end models like the Audi e-Tron and e-Tron GT.
However, it’s important to note that these are just proposals at this stage. So, while it’s worth keeping an eye on the situation, there’s no need to panic just yet.
