With higher customs duty on imported big luxury vehicles, the Mercs, BMWs and Audis are set to become costlier
New Delhi: Luxury cars will become more expensive by up to Rs3 lakh as disappointed automakers such as Mercedes Benz and Audi deciding to pass on increased duties imposed in the Budget on Friday to consumers.
"The Budget is very disappointing for us. We were hoping for some reduction in taxes for large vehicles instead of hiking it further," Mercedes Benz India Director (Corporate Affairs and HR) Suhas Kadlaskar told PTI.
The premium car makers usually bring in advanced technology into the country and this step will be very counter-productive, he added.
"We are going to pass on the additional burden to customers. We have not decided the exact amount yet, but on an average it will vary between Rs 2 lakh and Rs 3 lakh," Mr Kadlaskar said.
Expressing similar sentiments, Audi India said it may hike the prices of its products in the country.
"The increase in excise and customs duty on large cars in this budget is very surprising. This increase comes at a time when the Indian automotive industry was finding favour with customers looking for better and efficient cars," Audi India Head Michael Perschke said.
The company may now re-evaluate its pricing strategy in India, he added.
Society of Indian Automobile Manufacturers (SIAM) said the vehicle makers were not expecting duties on large cars to go up in the Budget.
"While the auto industry appreciates that there was a compulsion to increase base rates of service tax and excise duty, the industry had hoped that the excise duty on large cars would have come down from 22% to 16% rather than going up," SIAM President S Sandilya said.
The 27% excise duty will lead to significant increase of tax for large premium cars, he added.
Mr Sandilya, however, welcomed the move to impose higher customs duty on imported big luxury vehicles.
A sharp decline on budget disappointment has put the bulls on the back-foot
With most of the Asian indices opening flat all ended in red except for the Shanghai Composite and Nikkei 225. Thursday saw the lowest amount of FII inflow in the past five trading sessions while DIIs continued to be net sellers for third day in a row. Back home, the Sensex and Nifty, too, had a near flat opening at 17,657 and 5,380. The NSE saw the highest volume of 99.40 crore shares in the past 15 trading session (including today). Today's market move was one of the signs of increasing selling pressure. If the bulls don't make a comeback from the current level, we may Nifty headed towards 5,195.
On Thursday, US data showed new claims for unemployment benefits fell to a four-year low last week, and producer prices, excluding food and energy, were contained. Manufacturing data in New York and the US mid-Atlantic region also improved, according to regional Federal Reserve surveys.
The domestic indices were up before the budget session with all eyes set on the Union Budget 2012-13. Immediately on the onset of the session the indices went on to hit their intraday highs. The Sensex hit 17,871 while the Nifty rose to 5,446, however, both were at a lower high compared to yesterday. Finance minister Pranab Mukherjee outlined expenditure plans for various segments such as agriculture, infrastructure, rural development and defence while presenting the budget.
He also proposed to cap the subsidy program that spans diesel to fertilizers and raised service and excise taxes to rein in the wide budget deficit. The government forecast that the fiscal deficit will decline to 5.1% of gross domestic product next fiscal year from 5.9% in the current year. The gap for the year through March 31 will be 5.9%, wider than the 4.6% target set a year ago. Modest targets for trimming a rising fiscal deficit saw the indices falling. Both the Sensex and the Nifty hit 17427 and 5,305 respectively, their lowest low this week .The Sensex fell 210 points (1.19%) to close 17,466 while Nifty fell 63 points (1.16%) to settle at 5,318. The past two trading day's losses wiped off the gains made earlier in the week.
The government also has more than doubled its target for a capital infusion into state-run banks to 158.9 billion rupees ($3.2 billion) for the year ending March 2013 as it sought to bolster risk buffers and boost credit growth.
At the time of writing the European indices were trading in the green and the US stock futures were also in the positive.
The advance-decline ratio on the NSE was in favour of the losers at 536:1169.
In the broader market space, the BSE Mid-cap index declined 0.68% and the BSE Small-cap index dropped 1.12%.
BSE Fast Moving Consumer Goods (up 1.91%) and BSE Auto (up 0.22%) were the only sectoral gainers. The top losers were BSE Oil & Gas (down 3.32%); BSE Power (down 2.98%); BSE Capital Goods (down 2.94%); BSE PSU (down 2.63%) and BSE Metal (down 2.22%).
The top Sensex gainers were TCS (up 3.65%); M&M (up 2.71%); Hindustan Unilever (up 0.59%); Maruti Suzuki (up 0.52%) and Coal India (up 0.44%). The key losers were Sun Pharma (down 7.09%); ONGC (down 4.66%); Jindal Steel (down 4.23%); NTPC (down 3.82%) and Tata Power (down 3.65%).
The Nifty was led by ITC (up 4.45%); M&M (up 3.43%); Ambuja Cements (up 1.94%); Maruti Suzuki (up 0.92%) and HUL (up 0.75%). The major losers were Sun Pharma (down 7.83%); Cairn India (down 6.60%); ONGC (down 5.43%); Siemens (down 4.49%) and NTPC (down 4.23%).
McNally Bharat Engineering Company has secured two orders aggregating Rs70 crore from VISAPower. The stock declined 3.09% to close at Rs98.75 on the NSE.
Godrej Properties has decided to offer and issue up to 7.44 million equity shares of face value of Rs10 each of the company, with a right to allot an additional up to 7.44 lakh equity shares in case of oversubscription, to eligible qualified institutional buyers by way of an institutional placement programme. The stock fell 2.84% to close at Rs648.25 on the NSE.
Under the proposed amendment to the Income Tax Act, all persons, whether resident or non-residents, having business connection in India will be required to deduct tax at source and pay it to the government even if the transaction is executed on a foreign soil
New Delhi: In a measure that will have far-reaching impact on foreign investment and the Vodafone case having a tax implication of Rs11,000 crore, the government today proposed amendment in the Income Tax Act retrospectively from 1 April 1962, reports PTI.
Under the proposed amendment, all persons, whether resident or non-residents, having business connection in India will be required to deduct tax at source and pay it to the government even if the transaction is executed on a foreign soil.
The amendment will apply to all past transactions concerning assets in India.
Commenting on the government move, PwC Direct tax leader Rahul Garg said: "This amendment is to seek an overturn to the ruling of the Supreme Court judgment on mainly two cases-Vodafone and Azadi Bachao Andolan."
In the Azadi Bachao Andolan case, it was held that an entity having a tax remittance certificate from Mauritius would be exempt from paying tax in India.
The changes in the Income Tax Act, according to experts, will also have a bearing on about 500 overseas deals of similar kind, experts said.
As per the proposed changes in I-T Act, 1961, any asset which is registered or incorporated outside India shall be deemed to be situated in India "if the share or interest derives, directly or indirectly, its value substantially from the assets located in India.
"These amendments will take effect retrospectively from 1 April 1962 and will accordingly apply in relation to the assessment year 1962-63 and subsequent assessment years," says the Memorandum to the Finance Bill, 2012.
The amendment may have implications on Vodafone case in which the Supreme Court had held that the Income Tax department does not have the jurisdiction to levy Rs11,000 crore as withholding tax on Vodafone for its $11 billion acquisition deal with Hutchison Essar in 2007.