Among the string of new taxes announced in the Union Budget for all cars and sports utility vehicles (SUVs), one move received the least attention.
Finance Minister Arun Jaitley raised basic customs duty on golf cars, a low-speed, low volume, underpowered multi-seater not used on roads, six times to 60% from 10%.
While the idea about increasing taxes on small and large cars in the range of 1-4% was to increase tax income, industry experts are clueless on why the duty on golf cars was raised, as the volumes are largely insignificant.
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As per industry estimates, India buys around 500-600 golf cars a year, of which over 60% are built within the country, thus not attracting any customs duty. About a third of the golf cars sold in the country are assembled in India with imported parts. The balance, a small number, is imported.
Sumit Aneja, managing director, Speedways Electric, one of India's biggest golf car manufacturers, said, “Demand for golf cars is improving in India though the laws do not allow operating them on roads whereas abroad they are allowed to ply on roads.”
About 99% of the golf cars sold in India are electric-powered according to Aneja whose company has targeted to sell 300 golf cars this year.
Sridhar V, partner, Grant Thornton India said, “The move to increase duty on golf cars may have been done to discourage imports of such vehicles into the country while at the same time push local manufacturing, which would then fall in line with the government's Make in India initiative.”
Besides being used on golf courses such vehicles, which are between 4-23 seaters are also the primary mode of transport for various other purposes. They are used on campuses of large educational institutions and corporates, large factories, airports, theme parks, forest, dockyards, amusement parks, leisure resorts and luxury hotels.
The government is pushing for zero emission technology for vehicles for a cleaner environment. For this, it launched a scheme last year titled Faster Adoption and Manufacturing of Hybrid and Electric (FAME) under which the government will provide Rs 795 crore support till 2020.
In the Budget customs and excise duty concessions on specified parts of electric vehicles/hybrid vehicles, which was to come to an end by the end of this month has not been extended to an unspecified time limit.