Amongst the new taxes for cars and sports utility vehicles that Finance Minister Arun Jaitley announced in the Budget 2016-17, one move received the least attention. A six-fold increase in the basic customs duty on golf cars — a low-speed, low-volume, underpowered multi-seater not used on roads — from 10 per cent to 60 per cent.
While the idea about raising taxes on small and large cars by 1-4 per cent was to increase tax income, industry experts are clueless on why the duty on golf cars was raised, as the volumes are insignificant.
According to industry estimates, India buys 500-600 golf cars a year, of which 60 per cent are built within the country, thus not attracting any customs duty. A third of the golf cars sold in the country are assembled in India with imported parts. The remaining are imported.
Sumit Aneja, managing director of Speedways Electric, one of India's largest 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.”
Nearly 99 per cent 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- and 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 Vehicles in India, under which the government would 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.
This article was published in the Business Standard, to read please click here.