Arun Jaitley hikes tax on small cars, SUVs in Union Budget 2016

In the Union Budget 2016-17, Finance Minister Arun Jaitley proposed an increase of cess tax on passenger vehicles segment by 4 per cent on Monday.

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The move is aimed at keeping a check on the rise in the pollution caused due to vehicles. However, this could hit the automobile market in return as it would hit the sales of passenger vehicles.

The FM proposed an increase of 1 per cent on petrol, CNG and LPG cars, while a 2.5 per cent increase on small diesel cars and a 4 per cent increase on high end cars.

Moreover, Jaitley also proposed a 1 per cent hike on luxury cars which cost more than Rs 10 lakh and above.

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With the sales of automobile already on a low since last year, this move by the FM will certainly hit the automobile industry in a hard way.

According to Society of Indian Automobile Manufacturers (SIAM), the auto industry sold around 168K cars in 2015 with a drop of 0.7 per cent since 2014.