Tax on bike imports in India

Overview:

Thanks to Indian growth story, Cult bike maker Harley Davidson is likely to make its Indian foray soon. While dhoom 1 and Dhoom 2 have given a definite dimension to India’s premium bike market, Rolls Royce and Maybach are already getting decent numbers in their order book. Many youngsters and business honchos are following their sports or film’s hero and love to ride their dream machines.

Here are some rules and regulations which you must know when you are importing cars or bikes. When Sachin imported Ferrari and when Kingfisher Vijay Mallaya imported Lamborghini these regulations and the consequent uproar flashed in our TV screens. A complete knowledge on this will help you to import your dream machines and enjoy!

For importing a new bike you have to pay 105 percent duty and100 percent duty for a used one. In case of cars, for a completely built unit or CBU you have to pay 111 percent duty (60% on CBU imports plus countervailing duties and other levies). Whereas the duty on “completely knocked down” or CKD models which are assembled in country, is only 38 to 48 percent depending on engine displacement. These are based on EXIM policies (export and import policy) which are framed on 2002. Here are the few terminologies and conditions you must know

Customs duty: Tariff imposed on import/export on autos and auto ancillaries. In this year budget peak rate of Customs duty from 12.5 per cent to 10 per cent and also Central Sales Tax (CST) from 4 per cent to 3 per cent.

Excise Duty: Excise Duty is an indirect tax levied and collected on the goods manufactured in India. In last year’s Budget had reduced the excise duty on small cars (petrol engines within 1200cc and diesel engines within 1500cc) to 16 per cent, while maintaining it at 24 per cent for all other cars and utility vehicles.

Homologation: Process of certifying that a particular car is roadworthy and the Pune-based Automotive Research Association of India (ARAI) provide this clearance. According to existing norms, every original car model brought into the country by an individual or a manufacturer must have homologation clearance. Even domestic car manufacturers need a homologation certificate for new models. There are some exclusions as well

•Manufacturers can import left hand drive vehicles only for testing and research purposes.
•Individuals importing top-end cars can waive off the testing — or homologation — requirements. Any individual can import a vehicle priced above Rs 20 lakh without sending it for road-worthiness tests.
•Import of new vehicles is only permitted through Customs ports at Nhava Sheva, Kolkata, Chennai, Delhi Air Cargo and at ICD, Tughlakabad
•Very important note for Non Residential Indians (NRIs) – individuals coming to India for permanent settlement after two years of continuous stay abroad can bring in a car provided the vehicle has been in their possession for at least one year abroad. This now ensures that individuals coming to India do not bring in an absolutely new car.

An example will help to understand things better..
If X wishes to buy Suzuki GSX R 1300 Hayabusa(dhoom bike), here is the route ?
Import bikes prices in India are a tricky thing.
Since they can only be imported you will just have to find a reputable importer! The price you can expect to pay for a new bike is based on the following:

Price of bike in the country you wish to buy or the country the dealer has contacts in. + Freight charges + Import Duty @105% + Misc charges.
Eg. NEW from the US $10000 USD(Rs 4,50,000) + $500 Freight + $10500 + $500 = $21500 USD(Rs 10 lakhs).

Import vehicles duty and license structure:

Import of passenger cars / Jeep / Multi-utility vehicles / motorcycles / scooters / mopeds etc. are restricted items of import and can be imported against an import license. However, individuals coming to India on Transfer of Residence after two years continuous stay abroad and other importers may import these vehicles without a license but on payment of customs duty. The various customs duties leviable on vehicles imported into India are as follows:

Click here for rules and regulations to be followed when importing vehicle and for complete duty structure on vehicles and their parts/ancillaries

Troubles with Second hand vehicles:

The restrictions/conditions imposed on import of cars by importers for commercial purposes shall not be applicable in the case of passengers bringing their own car on Transfer of Residence. However, these imports shall be subject to the condition that the vehicle should have right hand steering and controls (applicable on vehicles other than 2 and 3 wheelers). Value of these vehicles for the purpose of levy of customs duty is CIF value, where C stands for the cost of the goods, I is the insurance and F is the freight. Cost in the case of new vehicles is the transaction value between the seller and the buyer, however in the case of old and used vehicles cost is arrived at by taking value of the vehicle in year of manufacture and after allowing depreciation at following rates.

•For every quarter during 1st year 4%
•For every quarter during 2nd year 3%
•For every quarter during 3rd year 2.5%
•For every quarter during 4th year 2%
•Thereafter subject to a maximum
depreciation of 70%

Here are the few useful sites you must visit before importing your dream machine
http://www.cbec.gov.in
http://www.dhi.nic.in

Since the guidelines are very strict and the duties are very high many follow grey market for buying thier dream machines. Here’s the economictimes report on muscle bike’s grey market. Government is checking the loopholes aggresively, pay the duty and enjoy you dream machine with complete satisfaction.

Bored with economics, relax! in the following posts we will have a look on popular imported bikes in India such as Suzuki Hayabusa, Yamaha R1, Kawasaki Ninja,Honda CBR and also about great Audi, Bentley and Porsche cars.