Import duties on new cars and SUVs priced above USD 40,000 sees no change despite changes in duty structure that was announced in Budget 2025. However, there has been a reduction in the effective duty on motorcycles.
- Basic Customs Duty reduced from 125 percent to 70 percent
- Additional 40 percent agricultural cess has been added
- 10 percent Social Welfare Surcharge completely removed
In this year’s Union Budget 2025, the BCD (Basic Customs duty) on cars costing more than USD 40,000 has been reduced to 70 percent from 125 percent earlier. Also, the import of these cars has been exempted from the SWS (Social Welfare Surcharge), which was 10 percent. While this should bring some positive cheer to new car buyers, it actually doesn’t, thanks to the Government of India introducing AIDC (Agriculture and Development Cess) to the duty structure, thus negating the benefits of exemption of SWS.
AIDC was first proposed in the Union Budget a few years back to improve agricultural infrastructure. On the customs side, AIDC was initially applied on items such as gold, silver, alcohol beverages and crude palm oil. Previously, there was no AIDC on vehicles, but now, AIDC must be factored in when calculating the effective duty rate.
This shift in taxation can be seen as a structural change to increase the central government’s revenue. BCD is shared between the centre and state governments. However, the AIDC is a central government levy, which goes exclusively to the centre.
Meanwhile, there has been a reduction in the effective duty on motorcycles. The BCD on the import of motorcycles, including complete built units (CBUs), semi-knocked down (SKD) and completely knocked down (CKD) units, has been cut. Also, the AIDC has not been introduced on the import of motorcycles, unlike in the case of cars.
Also See:
