Imposed luxury tax not applicable for small vehicles: Ministry

As per the amendment of the Finance Act after the 2019 Budget, the tax imposed on motor vehicles applied only to luxury motor cars and jeeps but not on small cars, the Finance Ministry said today.

Accordingly, vans, single cabs, double cabs, motorcycles, and motor tricycles did not fall under the amended tax.

The luxury tax on dual-purpose cab vehicles had been removed from November 1.

This luxury tax was implemented from March 6, 2019, and all Letters of Credit (LCs) opened after March 6 will be taxed.

According to new regulations, the luxury tax would be imposed on diesel and petrol cars and jeeps exceeding Rs.3.5 million when importing.

According to the Cost, Insurance and Freight (CIF) value of hybrid vehicles, the luxury tax would be imposed on the import cost exceeding Rs.4 million. The electric vehicles exceeding the import cost of Rs.6 million, the import tax would be imposed.

With the development of the motor vehicle technology, the luxurious nature of a vehicle was not defined according to its engine capacity but considering the equipped technical types of equipment.

Accordingly, the tax imposed on petrol motor vehicles with an engine capacity less than 1,800 and diesel cars and jeeps with an engine capacity less than 2,300, electric motor vehicles less than 200 kilowatts had been exempted from November.

LCs opened up to October 31 and cleared before April 21, 2020, are exempted from the luxury tax.

Accordingly, small vehicles such as Toyota Vitz, Suzuki Every, Toyota Roomy, Suzuki Alto, Suzuki Baleno, Daihatsu Petrol, Honda Grace, Suzuki Wagon R, Toyota Aqua exempt from luxury tax. Also Axio, Premio and vehicles equal to Allion models are exempt from the luxury tax. (Chaturanga Samarawickrama)