Finance Minister Arun Jaitley announced an addition in the taxes on Cars and SUV in Union Budget 2016-17. Government had taken this move concerning rising levels of pollution and traffic in the country and to promote the use of Electric and hybrid cars in India.

Additional infrastructure taxes that will be implemented are listed below;

• 1 percent will be charged on small petrol, LPG and CNG driven car- length below four meters and engine capacity of 1,200cc and below.

• 2.5 percent will be charged on diesel cars- length four meters and engine capacity of 1,500cc and below.

• 4 percent will be charged on other higher engine capacity cars, SUVs and larger sedans.

• 1 percent tax will be levied on purchase of luxury cars costing more than Rs 10 Lakh.

Exempted from above infrastructure tax are three wheelers, electric, hybrid and hydrogen vehicles. Moreover, motor vehicles registered as a taxi, cars for physically disabled and ambulances are also exempt.