Vehicle prices shoot up after after tax revision

With the new vehicle taxation policy that is in effect already, a luxury passenger car now costs upto Nu10 mn and the Indian manufactured passenger cars will cost at least Nu 0.4 mn.

The cost of the vehicle will also depend on the current price of the car and the price that was two years back. For the third countries imported cars, the pricing will depend on the fluctuating value of US dollars exchange rate.

Under the new vehicle taxation, a vehicle cylinder capacity at or below 1500cc, imported from India, would be imposed with a tax of 55% (45% sales tax and 10% green tax).

Vehicles imported from third countries having cylinder capacity at or below 1500cc would be imposed a 100% tax (45 % sales tax, 45% customs duty and 10% green tax).

And vehicles with the cylinder capacity of range between 1500cc to 1799cc would be imposed 115% tax (50% sales tax, 50% customs duty and 15% green tax. For those of you wishing to buy vehicles with 1799cc-2500cc, you will have to pay a tax of 120%. The vehicles with 2500cc to 3000cc will be imposed with a tax of 125%.

The Toyota cars imported from Japan will be levied with 100-180% tax. The Toyota Coaster bus would cost Nu 0.7mn – Nu 1mn more starting with price Nu 3.6mn to nearly Nu 6mn.

The luxury vehicles, like Prado, Land Cruiser, Fortuner. Hilux would cost Nu1.2 mn to Nu 5 mn from Nu 3.2mn to nearly Nu 13 mn. The hybrid vehicles, like Prius and Camry would cost about Nu 3.3 mn to Nu 3.7 mn.

For smaller Indian manufactured passenger cars, with new tax, one has to pay Nu 0.1 mn and above depending upon the price of car from the manufacturers.

The cars from Hyundai and Maruti, like from Eon, Santro, i10 to Alto, Swift, Celerio, will cost between Nu 0.4 mn to Nu 0.85 mn.

While the vehicle market would also experience, the new cars like Grand i10 price ranging from 0.5-0.8 mn and Celerio starting at nearly 0.5 mn.

Although the high taxation policy for the petrol and diesel engine cars is seen as measures to boost electric cars in Bhutan, still most Bhutanese are likely to purchase fuel cars rather than the electric vehicles.

A private employee, Sonam Penjor, said an electric car would have less impact on the environment, but he added that he would like to buy the fuel car imported from India as it is more efficient and convenient. He added that spare parts are easily available for the Indian manufactured cars as compared to cars imported from third countries.

A private employee, Thinley Jamtsho, also said he prefers to buy fuel cars as it would provide faster service than the electric cars, in terms of refueling.

The removal of vehicle import restriction and the new taxation policy is likely to affect the second-hand car business. The Chief Executive Officer of Daina Motors, Chimi Gyeltshen, said the price of the second-hand cars purchased from India would remain same, but the number of second-hand car buyers can decline as 50% of the buyers would now opt to purchase a new car.

Two years back, when the Government restricted the import of vehicles, the second-hand car dealers could sell about 80% of the cars after repairs and modification work. The most popular second-hand car brand sold was of the Maruti-Suzuki.

Before the vehicle import restriction, the Maruti-Sukuzi Alto car, 2004 model, valued at Nu 0.14 mn would fetch the sellers Nu 0.21 mn. The Maruti-Sukuzi A-Star (VXi) was sold at the price of Nu 0.35 mn. A second-hand Toyota Land Cruiser of 94-97 models would cost between Nu 0.65 mn- Nu 1.2 mn depending on the condition and modification of the vehicle.

A civil servant, Sanjay Puwar, said he would like to buy a second-hand Hyundai i20 instead of a brand new car. He said a second-hand car is more affordable at his income level. He added that the new taxation policy will have an adverse impact on the consumer’s choice to own a car, as high income earners can own a high priced car whereas the middle income group would prefer to buy the Indian cars and second-hand cars.

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One comment

  1. Doesn’t make much sense.

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