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Tatas against uniformly passing on tax cut on cars

March 17, 2003 15:02 IST

Tata Engineering, India's third largest carmaker, has decided against uniformly passing on the benefit of the excise duty reduction made in the Union Budget 2003-04 to its customers, sources said.

While excise duty on passenger vehicles was lowered by 8 per cent to 24 per cent in the Budget, the company has reduced prices of its petrol cars by about 5  per cent.

But, for diesel cars, which comprise majority of its sales, about 3.5 per cent benefit has been passed on to the customers, sources said.

Prices of diesel variants of the compact car Indica has been cut by Rs 11,000 to Rs 14,000 (about 3.4 per cent), but for the petrol models, prices have been slashed by Rs 16,400 to Rs 20,000 (about 5 per cent) with effect from March 1, 2003.

Similarly, price reduction for diesel models of the recently launched mid-size car 'Indigo' has been about 3.3 per cent while the petrol variants have witnessed an about 5 per cent cut.

When contacted, a Tata Engineering spokesperson said: "Passenger cars are being cleared (at the Pune factory) as per excise duty reduction in the budget at 24 per cent."

He, however, declined to comment on the difference in price cut between petrol and diesel cars.

Tata Engineering makes the Indica, Indigo and utility vehicles Safari and Sumo.

Finance Minister Jaswant Singh had in the 2003-04 Budget announced an 8 per cent cut in excise duty on passenger vehicles to 24 from 32 per cent.

He, however, imposed a 1 per cent calamity tax which diluted the total reduction to 7 per cent.

The excise duty of a new car is counted at the ex-factory price. Till the vehicle reaches the customer, the actual price reduction gets diluted to 4-5 per cent as the automakers have to account for costs like freight and dealer margins which are included in the final price of the car.


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