The Telegraph
Since 1st March, 1999
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Telco slams brakes on budget benefits

New Delhi, March 17 (PTI): Tata Engineering, the country’s third largest carmaker, has decided against uniformly passing on the benefit of the excise duty reduction made in the budget to its customers, sources said.

While excise duty on passenger vehicles was lowered by 8 per cent to 24 per cent in the budget, the company has reduced prices of its petrol cars by about 5 per cent.

But, for diesel cars, which comprise majority of its sales, about 3.5 per cent benefit has been passed on to the customers, sources said.

Prices of diesel variants of the compact car Indica has been cut by Rs 11,000-14,000 (about 3.4 per cent), but for the petrol models, prices have been slashed by Rs 16,400-20,000 (about 5 per cent) with effect from March 1, 2003.

Finance minister Jaswant Singh had in the 2003-04 budget announced an 8 per cent cut in excise duty on passenger vehicles to 24 from 32 per cent.

He, however, imposed an 1 per cent calamity tax which diluted the total reduction to 7 per cent.

The excise duty of a new car is counted at the ex-factory price. Till the vehicle reaches the customer, the actual price reduction gets diluted to 4-5 per cent as the automakers have to account for costs like freight and dealer margins which are included in the final price of the car.

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