The below article has been published by the Ministry of Finance on 31st October 2019.
Luxury tax on motor vehicles will not be affected for small vehicles.
The Finance Act has been amended as proposed in the Budget 2019 by Minister of Finance Hon. Mangala Samaraweera, the tax levied on motor vehicles will only be subject to luxury cars and jeeps and also the new tax will not be relevant to small cars.
Vans, single cabs, double cabs, motorcycles, and motor tricycles are not subject to this luxury tax. Earlier, double cabs were subject to the luxury tax category but it will be thrown off from November 1.
This luxury tax will be effective from the 6th of March 2019 and the new tax will apply to all luxury vehicles in which the letters of credit were opened to import motor vehicles after 6th March. In accordance with the new regulations, while importing diesel as well as petrol cars and jeeps are valued over Rupees 35 lakhs then the luxury tax is levied only for the exceeding amount.
The CIF Value of Hybrid Vehicles has been exceeded Rupees 40 Lakhs and the value of an electric vehicle has been exceeded Rupees 60 Lakhs, the Luxury tax will be levied only for the exceeding amount.
With the advancement of the technology for motor vehicles, the luxury of vehicles is determined not only by the engine capacity but also the features of a vehicle. Accordingly, the tax on cylinder capacity for petrol cars below 1800 cylinder, diesel cars and jeeps below 2300 cylinder and for electric vehicles below 200 kW will be removed from 1st November. Whereas, until the 31st of October the letters of credit have been opened and the vehicles are imported and cleared before 21st April 2020 will be exempt from the luxury tax.
This is further emphasized that this luxury tax will not be applied to small vehicles.
Accordingly, this luxury tax will not be applicable for Toyota Vitz, Suzuki Every, Toyota Roomy, Suzuki Alto, Suzuki Baleno, Daihatsu Petrol, Honda Grace, Suzuki Wegon R, and Toyota Aqua and also this luxury tax is not subject to normal Axio, Premio and Allion models.
