Excise Duty on Cars in India

Excise Duty is levied at the time of manufacture of any product in India. Excise Duty on Cars is
also levied at the time of manufacturing. The rate of excise duty on cars is decided by the
Central Govt and is the same across India.

The rate of excise duty on cars is different for different categories of cars and depends on their
size and engine.

Rate of Excise Duty on Cars

The different excise duty rates on manufacture of cars are mentioned below.

Condition 1 Less than 4 Metre More than 4 Metre and

and
In case of Petrol In case of Petrol
In case of Petrol Cars Cars Cars More than 1500 cc
Less than 1200 cc Less than 1200 cc More than 1500 cc AND
Condition 2 OR OR OR Ground Clearance
In case of Diesel Cars In case of Diesel In case of Diesel more than 170 mm
Less than 1500 cc Cars Less than 1500 Cars i.e. SUV’s
cc More than 1500 cc
Toyota Fortuner,
Maruti Alto, Honda City, Honda Accord,
Example Hyundai i10 etc Hyundai Accent etc Hyundai Sonata etc Ford Endeavour
etc
Applicable Amended by Amended by Amended by Inserted by
from Budget 2012 Budget 2012 Budget 2012 Budget 2013
Excise Duty
12% 24% 27% 30%
on such Cars

Both Condition 1 and Condition 2 are required to be satisfied for the Rate to be applicable. In
case any of the above condition is not satisfied the corresponding rate would not be applicable

4 Metre Condition
One condition that decides the rate of excise duty on cars is its size. If the length of the car is
less than 4 metres, the excise duty levied is 12%. But as soon as the length increases to more
than 4 metre, the excise duty doubles to 24%.
To avail this duty benefit to small cars, many car manufacturers have started reducing the length of their
Cars to less than 4 metre. For eg: Maruti reduced to size of its Swift Dezire to less than 4 metres.
Moreover, cars like Honda Amaze, Mahindra Quanto, Ford Ecosport have been launched with length
less than 4 metre keeping in view the excise duty benefit given to small cars.
Excise Duty on SUV Cars

While presenting the Budget 2013, Chidambaram increased the rate of excise duty on SUV’s
from 27% to 30%. The definition of SUV’s was given as those cars which are more than 4
metres in length, have an engine of more than 1500 cc and have a ground clearance of more
than 170mm.

Although this definition was given for implement a higher rate of excise on SUV’s some sedans
like Maruti SX4 and Toyota Corolla Altis also incidentally fall in this range. To prevent such
sedans falling in this range the govt has issued a circular stating that 30% excise duty should
not be levied on these cars. These cars are popularly known as sedans in common parlance as
well as trade parlance, and therefore 27% excise duty will be levied on such cars. (Refer:
Circular No. 972/06/2013.CX)

Excise Duty on Other Vehicles

Rate of Excise
Particulars
Duty
Ambulance 12%
Two & Three Wheel Electric Motor Vehicles
6%
(i.e. Vehicles run solely on Electricity)
Hybrid Vehicles 12%
Three wheelers
12%
(Run on fuels other than electricity)
Cars for Physically Handicapped 6%