What is the import duty on cars in India?

Due to the increasing number of movie stars in India importing their luxury cars from overseas, the Indian car business is experiencing a surge in demand for posh and luxury vehicles especially imported ones. Owning an imported car in India has become a mark of status and distinction to many people. Nevertheless, it should be realized that this process can be intricate especially when it comes to understanding and handling with car import charges in India. Importation of a vehicle is governed by specific guidelines and carries huge financial implications. If you wish to import a vehicle into India, here are some things you must know so that the processing will be smooth.

Import duty, also called import tax, or customs duty interchangeably, is a type of indirect tax or charge imposed by the Indian government on items purchased overseas and brought into the nation.
This tax, collected by customs officials, generates revenue for the local government while also protecting the domestic automobile industry from cheaper imported cars. Thereby, influencing consumer behaviour by making imported items less desirable than indigenous goods.
Import duties are computed as a percentage of the customs value of the imported goods, which includes elements like insurance and shipping costs.

As mentioned earlier, importing cars to India has certain rules and regulations, that need to be met, failing which can lead to consequences. Furthermore, the regulations to import a brand-new car to India are different from those to import a used car based on whether the car is new or previously owned, its engine size, type of fuel, and other aspects. Therefore, before importing a car, it is essential to fully understand these requirements in order to prevent financial consequences or legal issues.

The following requirements must be met when importing a new car:

• The car can only be imported from the country where it was manufactured.
• The car should be assembled or built outside of India.
• The vehicle must be entirely new. It must not have been previously registered, loaned, sold, or leased prior to being imported into India.
• The car is required to be right-hand drive. The car's headlights should be designed to illuminate the left-hand side of the road.
• The speedometer of the car should indicate speed in kilometres, not miles.
• Importing a car is only doable through navy docks located in Kolkata, Mumbai, and Chennai. As a result, the car should only be imported into India through one of these ports.

The following requirements must be met when importing a used car:

• The year of manufacture of used imported cars shouldn't be longer than three years. Before importing the car, make sure to check the manufacturing date.
• The vehicle should be registered, leased, loaned, or sold.
• The car must be road-worthy. Thus, it must possess a roadworthiness certificate that is valid for at least five years.
• The car is required to be right-hand drive. The car's headlights should be designed to illuminate the left-hand side of the road.
• The speedometer of the car should indicate speed in kilometres, not miles.
• Importing a car is only doable through navy docks located in Kolkata, Mumbai, and Chennai. As a result, the car should only be imported into India through one of these ports.

Vehicles that have been banned cannot be imported into India. A person must ensure that the car being imported does not have the following specifications:

• Cars with engine capacities that range between 1,000cc and 2,500cc.
• Scooters with engine capacities that vary between 250cc and 800cc.
• Heavy-duty two-wheelers or motorbikes with engine capacities that range between 50 and 500cc.

Foreign nationals or non-resident Indians (NRIs) can import one car from overseas while moving permanently to India. The vehicle could be an old or new car or two-wheeler. Here are the additional prerequisites for importing a car/bike under ‘transfer of residence’:

• The NRI/foreign national shouldn't have resided in India for at least two years prior to the transfer.
• The person should intend to stay in India for a minimum of one year following their relocation.
• The applicant shouldn't have gone through the ‘transfer of residence’ procedure a minimum of three years prior to the present transfer.
• Only one family member can carry out this process. They must complete the transfer of residence application form for this purpose.
• The car should be imported within six months of their relocation to India.
• If the car that is being imported possesses an engine capacity above 1,600cc, it must be registered for at least one year before importation.

Importing a car to India can be a lengthy process, so it is important to be aware of some factors ahead of time. Here's an outline of the things you must know before considering importing a vehicle into India:

• Import Duty on Cars in India:

A car worth more than forty thousand US dollars Cost, Insurance, and Freight (CIF) is liable to a 100% customs tax, while those valued at less than forty thousand US dollars incur a 70% import charge. The import tax on used cars in India is fixed at 125%.

• Registration:

After importing the car, you must register it with the closest Regional Transport Office (RTO) in India. It is vital to understand that the registration and road tax are separate from import charges. These fees vary according to the make, model, and price of the car.

There are two options for getting a vehicle imported to India. You can import the vehicle directly through the manufacturer or through a dealer. If you choose to import the car yourself, you are responsible for the necessary paperwork and need to follow up on the process personally.

On the contrary, if you choose to hire the assistance of the dealer, they will assist you with importing the car to India and registering the vehicle in the country. Whatever, the option you choose, it is advisable to purchase car insurance for protection against unforeseen situations that may arise.

The following documentation will be required when importing a vehicle into India:

• Letter of credit/ purchase order
• Import Licence
• Vehicle invoice
• GATT Declaration
• Test report
• Bank Draft
• Insurance policy
• Sea waybill / Bill of lading
• DEEC (Duty Exemption Entitlement Certificate)
• ECGC (Export Credit Guarantee Corporation of India)
• DEPB (Duty Entitlement Pass Book), or other documents as needed.

In conclusion, dealing with the complexities of custom duty for cars in India necessitates a thorough understanding of regulations, rules, and associated expenses. While automobile import duty in India increases the overall cost of importing a vehicle to the country, grasping the process is crucial for anyone intending to import cars, new or used. Additionally, it is critical to explore choices for car insurance and commercial car insurance in order to protect the car as well as comply with regulatory requirements. Using tools such as a car insurance calculator can help with estimating insurance prices and ensuring suitable coverage.

Importing a vehicle to India will cost between 150 and 200% of the price of the car itself.

Non-resident Indians (NRIs) who have not lived in India for a minimum of two years may import a car. Depending on whether the car is old or new, they might be required to own it for a minimum of one year prior to importation.

India accepts vintage car imports only if the vehicle was built on or following the 1st of January 1950. Therefore, you cannot import a vintage car from the 1920s to India.

The imported vehicle must be tested to ensure it complies with the Central Motor Vehicles Act, 1988, Central Motor Vehicle Rules, 1989, and Exim Policy, 2001. Testing can be performed from any of the aforementioned agencies:

• Automotive Research Association of India (ARAI), based in Pune.
• The Central Farm and Machinery Training and Testing Institute (CFMTT), in Budni, Madhya Pradesh.
• Vehicle Research and Development Establishment (VRDE), located in Ahmednagar.

Only automobile makers can import left-hand drive vehicles into India.

Yes, electric vehicles imported to India are liable to car custom duty in India similar to conventional cars import. However, it is worth noting that the Indian government is presently exploring proposals to reduce import duties on electric vehicles, particularly new cars, in order to encourage their adoption and promote the growth of India's electric vehicle industry.