Luxury cars are considered a status symbol and typically need to be imported. Movie stars, business giants and high-net-worth individuals often import these cars to India. Due to their exclusive features, people willingly spend an unimaginable amount of money. However, buyers must be aware of other costs (besides the price tag) they must incur upon receiving the car delivery in India, especially the taxes. Here, we talk about import duty on cars in India.
What is Import Duty?
Import duty is an indirect tax that India's customs authorities levy on goods purchased in a foreign country and brought to India. Import duty is also known as import tax, customs duty or import tariff. Usually, the import duty on cars in India is steep. By charging customs duty, the price of the imported goods rises, and the demand decreases. India and many other countries levy import duties to support their respective economies by encouraging citizens to buy domestic products.
Import Tax on Cars in India
Customs duty in India falls under the Customs Act, 1962. The Central Board of Excise and Customs (CBEC) lays down numerous policies concerning the collection of customs duties. Foreign cars imported to India cost almost twice the retail price when you add the customs duties. Presently, India imposes a 100% customs tax on imported cars with Cost, Insurance and Freight (CIF) value exceeding USD 40,000. For vehicles with CIF below USD 40,000, you will be charged 60% import duty. Import tax on cars in India for used vehicles is 125%.
Things to Know About Importing Cars to India
The new car must be manufactured and assembled outside India.
The used car should not be more than three years old.
The speedometer must display the speed in kilometres.
The car must be a right-hand drive vehicle.
The buyer must bring the car to India via naval docks.
Cars with 1000 cc to 2500 cc engine capacity are banned in the country.
Non-resident Indians (NRIs) permanently moving back to India are permitted to import one car.
Importance of Car Insurance for Imported Cars
After importing the car to India from abroad, the car owner must abide by all the Indian motor laws, including the vehicle insurance regulations. Per the Motor Vehicles (Amendment) Act, 2019, it is mandatory for car owners to get a Third-party Liability (TPL) insurance cover. Car owners may also opt for comprehensive car insurance policies to get all-round coverage for their imported vehicles. A typical car insurance covers:
Loss or damage to the insured car
Injury or death caused to people in the vehicle during an accident
Emergency roadside assistance
Key replacement charges
Loss or damage of personal belongings
Other specific add-on riders
Buy Car Insurance
Car insurance is mandatory by law, whether your car is imported or bought domestically. The cost of repairing damaged vehicles, especially imported cars, can be significantly high. Car insurance covers all such expenses, up to a certain sum insured. With car insurance, you also get no claim bonus (NCB) benefits during policy renewal. Contact your general insurance provider and get your car insurance now.Disclaimer: The above information is indicative in nature. For more details on the risk factor, terms and conditions, please refer to the Sales Brochure and Policy Wordings carefully before concluding a sale.