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Informist, Saturday, Feb. 1, 2025

 

MUMBAI – The Centre has, in the Union Budget 2025-26 (Apr-Mar) on Saturday, recommended reducing customs duties on certain motor vehicles and motorcycles on Saturday. Additionally, it also proposed to exempt import duty on products used to make lithium-ion batteries for electric vehicles. Further, the Centre increased allocation for production-linked incentive scheme for the auto sector for the next financial year, and its allocation towards the PM Electric Drive Revolution in Innovative Vehicle Enhancement scheme.

 

The Centre has proposed to cut customs duty on motor vehicles used to transport ten or more people and on vehicles used to transport goods to 20% from 25-40% currently. However, on these vehicles, the government has recommended adding Agriculture Infrastructure and Development Cess of 5-20%, from nil before.

 

The government had introduced this cess in the Union Budget of FY22. This cess is applied over and above the basic tax, to fund development of agriculture infrastructure in India. The Centre has proposed to add Agriculture Infrastructure and Development Cess of 67.5% on imports of used motor vehicles, from nil before.

 

For motor cars and other motor vehicles that have a cost, insurance and freight value of over $40,000, or petrol-run vehicles with an engine capacity of over 3,000 cubic centimetres and diesel-run vehicles with engine capacity of over 2,500cc, customs duty has been proposed to be cut to 70% from 100% currently.

 

Basic customs duty on motor vehicles which are used for transport of goods is proposed to be 20%, from 25-40?fore.

 

DUTY ON MOTORCYCLES

Customs duty on completely built units of motorcycles with an engine capacity below 1600cc has been proposed to cut to 40% from 50%. These units with an engine capacity over 1600cc may see customs duty being cut down to 30% from 50% currently.

 

Customs duty on semi-knocked down motorcycles with an engine capacity below 1600cc has been proposed to cut to 20% from 25%. The Centre has proposed to cut customs duty on these units with an engine capacity of over 1600cc to 20% from 25% currently.

 

Customs duty on completely knocked down motorcycles with an engine capacity below 1600cc has been proposed to cut to 10% from 15%. Duties on these variants with an engine capacity exceeding 1600cc have been proposed to cut to 10% from 15%.

 

Motor cars and other motor vehicles that have been designed for the transport of people in other than completely knocked down and semi-knocked down form, with a cost, insurance, and freight value exceeding $40,000 will attract Agriculture Infrastructure and Development Cess of 40%, from nil before.

 

ALLOCATION TO SCHEMES

The government has increased its allocation to production-linked incentive scheme for manufacturing of automobiles and auto components to INR 28.19 billion for FY26. The government had budgeted INR 35 billion for FY25, which was reduced to INR 3.47 billion in the revised estimates.

 

The outlay for the government's scheme for promoting electric vehicles, the PM Electric Drive Revolution in Innovative Vehicle Enhancement scheme, increased to INR 40 billion for FY26 from INR 18.71 in the ongoing financial year. 

 

The Centre has proposed to exempt basic customs duty on essential materials like cobalt products, light emitting diodes, zinc, lithium-ion battery scrap, and other critical minerals and at least 35 capital goods which are used to manufacture semiconductors, and batteries for electric vehicles.  End

 

Reported by Anand JC

Edited by Deepshikha Bhardwaj

 

 

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