"Since inception, we have been exempted from the 4 per cent Central Sales Tax in Uttar Pradesh related to the amount of investments we make in the state. That is coming to an end," Jnaneswar Sen, senior general manager, HSCI told PTI.

He said once the holiday is over the company will start charging the tax from its customers, thereby increasing the prices of its sedans -- City, Civic and Accord.

"With the announcement in the Budget that CST will be reduced to 3 per cent effective April 1, we will be charging that amount to the customers," he said.

This will mean that 'City', which is priced at Rs 6.75 lakh, can be costlier by Rs 20,250. 'Civic', priced at Rs 10.88 lakh, would be dearer by about Rs 32,644 and 'Accord', which is tagged at Rs 14.92 lakh, may cost Rs 44,760 more.

Sen, however, said the company has not fixed the exact amount and the timeframe for the price hike. Honda's decision follows the price hike announced by car market leader Maruti as well as Hyundai and Ford India in the wake of the increased education cess levied in the Budget.

HSCI, a joint venture between Honda Motor of Japan and Siddharth Shriram Group firm Siel Ltd, made an initial investment of Rs 450 crore (Rs 4.5 billion) in 1997 to set up its unit with a capacity of 30,000 cars a year in Greater Noida.

Later, the company increased the capacity to 50,000 cars with an investment of Rs 150 crore (Rs 1.5 billion), and is expanding it to one lakh with Rs 300 crore (Rs 3 billion) investment. HSCI has said it will set up a plant in Rajasthan for making compact cars.