Delhi government raises registration tax on diesel vehicles: JP Morgan

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• Delhi government raises registration tax on diesel vehicles: Diesel
powered cars are going to get costlier in Delhi, as the government has
proposed an increase in vehicle registration tax – this will be applicable
from April onwards.
• Vehicle prices are likely to rise between c.1% – 2.5% based on the
price slabs for vehicles. As per Times of India - In Delhi, nearly 1,000-
1,200 cars are registered every day of which c.30-40% are diesel-run
cars. The increase in diesel tax follows a ruling by the Delhi government
last year - wherein they had raised registration taxes for vehicles
(including two and four wheelers).



• The increase in tax on diesel cars appears to be based on the provisions
of the Kirit Parikh group recommendations wherein they had proposed
additional levies on diesel vehicles – given that the price differential
between petrol and diesel fuels is widening.
• Our View: Over the past few years, diesel vehicles have been growing
ahead of the market - and this segment now accounts for c.25% of
industry sales. Delhi is amongst the largest markets for passenger
vehicles in the country and the higher taxes will likely impact consumer
sentiment. We would wait to see if other states follow suit.