Brace up to pay more for the sports utility vehicle you were planning to buy or that hi-end smartphone you were fancying. Like last year, luxury items have got some special attention in this year’s Budget, too.
The finance minister has increased excise duty on SUVs from 27% to 30%, which the auto companies are expected to pass on this hike to consumers. This would make SUVs 3% more expensive.
The richie rich will have to shell out even more as the duty on imported luxury cars has been raised to 100% from 75% now. The duty on imported motorcycles with engine capacity of more than 800cc also goes up to 75% from 60% at present.
Michael Perschke, Head, Audi India, said, “We will have to seriously evaluate the impact of this hike on our prices and, have no choice other than to pass on the increase to the customer.”
Those looking to buy a yacht, will have to pay 25% import duty from 10% at present.
Not just the drive, costs of eating out has also gone up, with air conditioned restaurants brought under the service tax ambit. Till now, tax was charged on AC restaurants that served liquor.
With a 6% duty on mobile phones costing more than Rs2,000, smartphones just got a tad more expensive. Luxury housing also becomes expensive, with the rate of abatement on homes and flats of above 2,000 square feet, or costing Rs1 crore and above, being reduced from 75% to 70%. This would mean increase in service tax payment.
Even a marble floor will cost more as excise duty on marbles has been doubled to Rs60 per square metre. Also, pay more for fancy silk clothes as the custom duty on raw silk has been increased by 10%.
Cigarettes, the staple item for duty hikes every Budget, has not been spared this time too, with the duty raised by 2% to 18%.
New cable connection may also cost more as duty on imported set-top boxes, or STBs, has been raised by 5%. However, this Budget may be easy on the wallet as far as certain items are concerned.
Apparel prices may be reduced or at least will not be increased anytime soon, say retailers, as the Budget has announced a zero excise duty on cotton and yarn at the garment stage.
Buying gems will become slightly cheaper, as the duty on precious and semi-precious stones has been cut from 10 to 2%. Also, home furnishing items such as handmade carpets or coir and jutes will be exempted form excise duty.
Also, better immediately buy that iPhone or the Galaxy handset you have been eyeing for long as prices of all handsets above Rs2,000 are set to go up following the FM’s proposal to hike excise duty to 6% against the existing 1%.
While the industry is concerned about a possible increase in the grey marketing of devices, experts also feel that this will give a knee jerk to the growth of data services that the government so positivity looks forward to.
According to analysts, the sales of these devices would slow with the price hike which will also affect the growth of data services.
"This change will result in smartphone and feature-phone retail prices going up, as a result of which we will see some dampening in consumer sales. This, in turn, will impact negatively the uptake of data services in India and in all likelihood slow it, just at a time when it has begun to gain momentum,” said Mohammad Chowdhury, leader, telecom, PwC India.
A feature phone with at least basic internet facility costs `3,500-5,000 in the Indian market. Following the move, this sector is likely to be affected the most.
“We do not see the Budget reviving the consumer sentiments in the absence of any specific incentives to boost consumer sentiment itself. Further, the increase in the excise duty on mobile phones will not have a positive impact on the industry and should lead to an increase in prices for end-consumers,” Asim Warsi, VP -Samsung Mobile, said.
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