Excise Duty on Cars - Different Model Rates

Excise duty is levied on cars at the time of manufacturing. It differs according to the models and specifications of the cars. There are also specific conditions for the levy of excise duty on cars.

Excise duty on car is levied at the time of manufacturing a car in India. Cars of different models and make are eligible for excise duty tax.

Listed below are some of the conditions that needs to be fulfilled if excise duty tax is to be charged on the car.

  • There should be a manufacture
  • The manufacture should be in India excluding special economic zone
  • The manufacturer should produce the cars
  • The cars manufactured should be specified in central excise tariff act

The Central Board of Excise and Custom is responsible for administering excise duty tax.

Excise Duty on Cars Budget 2015 – Rates for Different Models:

One of the main conditions that determine the excise duty levied on a car is its size. For cars that are less than or equal to 4 metres in length, the excise duty levied is 8%. The excise duty levied on cars with a length of more than 4 metres is 20%. Given below is the excise duty on cars for the year 2015 and the rates applicable for different models.

Condition 1 Car of less than 4 metres in length Cars of more than 4 metres in length
Condition 2

For petrol cars below 1200 cc

and for diesel cars below 1500 cc

For petrol cars below 1200 cc

and for diesel cars below 1500 cc

For petrol cars below 1200 cc

and for diesel cars below 1500 cc

For petrol cars below 1200 cc

and for diesel cars below 1500 cc

Example of the cars Maruti, Alto, Hyundai i10, etc Honda city, Hyundai accent, etc Honda Accord, Hyundai Sonata, etc Toyota Fortuner, Ford Endeavour, Toyota Innova, etc
Excise duty on these cars 8% 20% 24% 24%
Applicable from From budget 2012 From budget 2012 From budget 2012 From budget 2013

How Excise Duty impacts your Car Purchase?

Excise duty on a car can be a major factor when it comes to purchasing a car. A heavy excise duty tax on your car will mean the customer has to shell out more for the car. Bigger the car, higher the excise duty tax on the car. Let’s consider a customer who is trying to make a choice between two cars, a Honda City and a Honda Accord, the excise duty on the cars differ owing to the difference in their length. If the customer is looking for an economical option then they will go for the Honda city as it is much less expensive. The excise duty tax plays a role in deciding the price of the car. Many companies have resorted to reducing the length of their cars to less than 4 metres to avail the excise duty benefit on smaller cars below the length of 4 metres.

Date since which new Excise Duty on Cars was Implemented:

Central excise duty tax is revised along with the budget every year but there necessarily doesn’t have to be a change in the rate every year. The excise duty on cars was revised last in the year 2013.

New Excise Duty on Large Cars:

The excise duty tax levied on large cars is different than the excise duty tax levied on smaller cars as they vary in length. By definition, SUV are cars that are more than 4 metres in length and fall under the large vehicles category but some sedans fell into the same category. To prevent sedans from falling into the same category the government instructed that the excise duty levied on them should be as on mid sized cars. The excise duty levied on large cars is much higher and the rates might be hiked in the future.

Given below is a list of other vehicles along with the excise duty tax charged on them:

Vehicle Excise Duty Levied
Ambulance 12%
Two or three wheel electric motor vehicles 6%
Hybrid vehicles 12%
Three wheel vehicles 12%

News About Excise Duty on Cars

  • Government plans to cut excise on fuel due to rising prices

    The rising prices of petrol and diesel in the global markets are prompting the finance ministry to decide upon cutting down on excise duty. The move is supposed to cut the rising inflation. The global crude oil prices are at a 6 month high now. Earlier, the present government took advantage of the falling crude oil prices and raised the excise duty on fuel several times to garner more than 70,000 crore rupees in a single year.

    Now with the soaring prices of crude oil the government is looking at bringing down the excise duty on crude oil. Although, the high excise duty on these fuels had given good collections to the government, it cannot allow inflation to get out of control. Currently, the state levies an excise duty of Rs.21.48 per litre of petrol as against a meagre rate of Rs.9.48 per litre in the year 2014.

    20 May 2016

  • Budget 2016: Excise Duty Cut sought for Big Cars

    Ahead of the Union Budget, the Society of Indian Automobile Manufacturers (SIAM) has urged the government to reduce excise duty on large cars and sports utility vehicles. They have also requested an incentive for scrapping old vehicles.

    SIAM director-general Vishnu Mathur said they have asked Finance Minister Arun Jaitley to bring down the excise duty to 20 percent. The main aim is to standardise the excise duty to two rates – one for small cars and another for large vehicles.

    The association hopes that offering incentives for scrapping old vehicles instead of making it mandatory, will help get the really old vehicles – more than 15 years old – off the road. This will help reduce air pollution and generate revenue for the government, Mathur said.

    22 February 2015

  • Automobile Sector wants reduced Excise Duty on Cars

    With the Union Budget around the corner, representatives from the automobile sector have sought a reduction in the excise duty on SUVs, mid-size and large cars. The current excise duty is 12.5%, 24%, 27% and 30% respectively for small, mid-size, large cars and SUVs, making manufacture of large cars less profitable. Members of the Society of Indian Automobile Manufacturers also proposed an incentive to replace old vehicles with new ones, in a bid to improve air quality and bring better models on road. The association hopes this incentive can be applied to all categories of vehicles.

    21 January 2015

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