The Indian Government may modify the classification for taxation on SUVs, which has led to higher taxation of certain sedans in the Indian market as well. In the recent budget, the tax on SUVs was hiked from 27 percent to 30 percent. But the classification is not very specific, resulting in some sedans like the Maruti Suzuki SX4, Fiat Linea and Toyota Corolla Altis to be included under the SUV tax rule. This has led to increase in cost of these cars by Rs. 15,000/- to Rs. 35,000/-.
The Government is planning to introduce a new concept of two-box vehicles which will exempt the sedans and other hatchbacks to get classified as SUVs. According the recent budget, any car longer than 4-metres in length, with a engine larger than 1.5-litres and with a ground clearance of more than 170 mm is classified for higher SUV tax. But some three-box sedans too come under this classification leading to higher taxation on them. Other sedans come under lower tax of 24 to 27 percent.
The Society of Indian Automotive Association has approached the Government with this issue and is being discussed with the Finance Ministry. There has been a tremendous drop in car sales after the announcement of the budget on 28th February 2013, of almost 26 percent which is the worst drop in more than a decade. The sales of sedans too has dropped considerably due to this higher taxation meant for SUVs. So to rectify this, the Government may introduce the new two-box concept for taxation.