Importing luxury cars to India is a status symbol embraced by movie stars, business moguls, and high net worth individuals. These exclusive vehicles often come with a hefty price tag, but buyers need to be aware of additional costs beyond the initial purchase. One important factor to consider is the import duty on cars in India.
Additionally, the buyers should be prepared for other expenses associated with importing the cars into the country. Taxes play a crucial role in determining the overall cost of importing a car to India. It is must for buyers to understand the import duties to make right decisions and avoid unexpected financial surprises upon delivery.
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What is Import Duty?
Import duty on cars in India is like a tax imposed by customs authorities when you buy something from foreign country and bring it into India. You might hear it called import tax, customs duty, or import tariff. In India, the import duty on cars is usually high. This customs duty increases the cost of imported goods that make them less in demand. Countries, including India, use import duties to boost their economies by encouraging people to buy products made in India. It is a way to support domestic industries and businesses and increase the country GDP.
Import Duty on Cars in India
In India, customs duty on cars is governed by the Customs Act of 1962, with the Central Board of Excise and Customs (CBEC) overseeing the related policies. Importing foreign cars into India include a heavy cost, nearly doubling the retail price due to customs duties.
Here is a breakdown of the import duty on cars in India:
| CIF Value | Customs Duty |
|---|---|
|
Exceeding USD 40,000 |
100% |
|
Below USD 40,000 |
100% |
|
Used Vehicles |
125% |
For vehicles with a cost, Insurance, and Freight (CIF) value above USD 40,000, the customs duty is 100%, while those below USD 40,000 incur a 60% of import duty. Importing used cars into India Include a higher import tax rate of 125%. It is essential for buyers to know these duty percentages when considering the overall cost of importing cars to India.
Read also: Customs Duty on Gold in India in 2024 – Hidden Gems!
Who Can Import Cars to India from USA or Other Countries?
It is essential to know who is eligible, especially when considering the associated import duty on cars in India. Here is the list of eligible person of it:
- Honorary Consulate Members: They can import, but only after getting permission from the Ministry of External Affairs.
- Multinational Companies: If a company has offices in India, they can import the cars.
- Physically Challenged Individuals: People with physical challenges can also import cars.
- Journalists: With the proper accreditation certificate from the Ministry of Information and Broadcasting, journalists can also import the cars.
- Inheritance: If you have a relative living abroad, inheriting their vehicle opens the door.
- Non-Resident Indians (NRIs): If you are an NRI who has not been in India for at least 2 years before importing, you are eligible to import the cars in India.
- Religious Bodies and Charitable Trusts: They can import the cars in India provided the paperwork for vehicle registration is proper.
- Foreign Equity Companies: Companies based outside India dealing with foreign equities can also import.
Rules For Importing Cars to India
Rules For New Cars
For bringing in new cars to India, there are some important rules to keep in mind:
- Country of Origin: New cars can only be imported from the country where they were manufactured or assembled.
- Built Overseas: The car must be developed and built overseas.
- Right-Hand Drive: If you are importing, the car should be a right-hand drive.
- Brand New Condition: The car must be brand new, with no history of being rented, used, or leased.
- Port of Entry: Imported cars should legally enter through Mumbai, Kolkata, or Chennai naval docks.
- Speedometer Display: The speedometer should display statistics in kilometers per hour.
- Headlight Placement: Headlights must be positioned to illuminate the left side of the road properly.
Rules For Used or Old Cars
For bringing in Used or old cars to India, there are some essential rules to keep in mind:
- Age Limit: Used vehicles cannot be older than 3 years.
- Right-Hand Drive: It should also be a right-hand drive.
- History Check: The vehicle must not have been rented, leased, or sold to others previously.
- Headlight Arrangement: Headlights should properly illuminate the left side of the road.
- Port Entry: Like new cars, used vehicles can legally enter India through Kolkata, Chennai, or Mumbai docks.
- Roadworthiness: A used vehicle can be driven in India if it is roadworthy, with a valid roadworthy certificate for at least 5 years.
- Speedometer Display: The speedometer must show statistics in kilometers per hour.
Conclusion
Understanding the rules for import duty on cars in India is vital. Whether importing new or used vehicles, being aware of conditions like country of origin, right-hand drive, and headlight placement is crucial. These factors, including customs duties, significantly impact costs. Being well-informed ensures a smooth import process for that special vehicle into India.
Frequently Asked Questions (FAQ)
When bringing in vehicles from another country, it is important to keep in mind the custom duty fees that will apply. For brand new cars, the duty can range from 60% to 100% of the overall cost, while used cars could have a duty of up to 125%.
Cars valued at more than USD 40,000 are subject to a hefty 100% customs tax, while vehicles under this amount are met with a 60% import duty. As for used cars, the import tax amounts to a steep 125%.
India’s import taxes are rooted in the government’s strategic use of import substitution industrialisation (ISI) to support local businesses. This trade tactic prioritizes homemade goods over foreign imports. Though these taxes may appear burdensome, they serve a vital purpose of stimulating the development of domestic industries and promoting self-sufficiency.