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Reasons for Variations in Indian Car Prices
Indian car market is occupied with a number of car models belonging to different price categories. Surprisingly, a car of a particular brand with the same features and technology has a different price tag in different states of the country.
The basic components of car prices are the car cost (ex-showroom price), road tax and car insurance. Car cost remains the same across the country but the road tax and insurance rates differ in different states. This difference of road tax and insurance rates in various different Indian states is the major cause of variations in Indian car prices.
The basic components of car prices are the car cost (ex-showroom price), road tax and car insurance. Car cost remains the same across the country but the road tax and insurance rates differ in different states. This difference of road tax and insurance rates in various different Indian states is the major cause of variations in Indian car prices.
Insurance rates
Driving on Indian roads is a big challenge with so many bumps, sleek corners and ponds in between the roads. Any brand new car may get hit by any of these road hazards or even by any other car sharing the road. This calls for a car insurance policy that helps car owner to deal with the financial law.
Though the insurance policy is same across the country, the rates differ from region to region. This difference in insurance rates also influences the overall price of the car.
The insurance companies across different territories and cities give different insurance rates to car owners depending on the road condition, traffic patterns, local cost of car parts, cost of medical services and traffic law enforcement. Urban areas and densely populated cities invoke higher insurance rates because these are notorious for high theft and accident claims.
Though the insurance policy is same across the country, the rates differ from region to region. This difference in insurance rates also influences the overall price of the car.
The insurance companies across different territories and cities give different insurance rates to car owners depending on the road condition, traffic patterns, local cost of car parts, cost of medical services and traffic law enforcement. Urban areas and densely populated cities invoke higher insurance rates because these are notorious for high theft and accident claims.
Road Tax
Road tax is tax imposed on the car owners by the local or central government for usage of cars. The basic motive of the government to put road tax is to control the traffic flow and ease congestion. Some of the government even takes road tax as an amount required by the government to improve road condition and the infrastructure. The imposed road tax is subjected to state not the nation as a whole. Different states have different road tax, depending on the government rules, traffic regulations, road conditions, and even the actual car cost.
Currently, Karnataka road tax is believed to be the highest in the country. Car owners in the state pay nearly about 11% road tax for the cars that are below the price tag of 10 lakh and nearly about 15% that are above Rs 10 lakh. This accounts for a road tax of Rs 1,10,000 on a car priced at Rs 10 lakh. Maharashtra also has a high road tax which further going to increase more. It is said that in Maharashtra cars are more costly because of the high road tax coupled with Octroi. Hyderabad is next in line with nearly about 9% rod tax where the car owners pay a road tax of around Rs 90,000 on a car with a price tag of Rs 10 lakh.
It is believed that cars in Delhi, Haryana and Chandigarh are much cheaper than other Indian cities. In Delhi, car owners pay a road tax of 2% for cars priced below Rs 4 lakh and 4% for cars at cost above Rs 4 lakh. This states that for a car priced at Rs 10 lakh, car owner in Delhi pays only Rs 40,000 as road tax. In Haryana and Chandigarh, cars are even less costly than Delhi because here there are no percentages of road tax. Car owners in Haryana and Chandigarh have to pay a fixed amount as registration fees and road tax.
Currently, Karnataka road tax is believed to be the highest in the country. Car owners in the state pay nearly about 11% road tax for the cars that are below the price tag of 10 lakh and nearly about 15% that are above Rs 10 lakh. This accounts for a road tax of Rs 1,10,000 on a car priced at Rs 10 lakh. Maharashtra also has a high road tax which further going to increase more. It is said that in Maharashtra cars are more costly because of the high road tax coupled with Octroi. Hyderabad is next in line with nearly about 9% rod tax where the car owners pay a road tax of around Rs 90,000 on a car with a price tag of Rs 10 lakh.
It is believed that cars in Delhi, Haryana and Chandigarh are much cheaper than other Indian cities. In Delhi, car owners pay a road tax of 2% for cars priced below Rs 4 lakh and 4% for cars at cost above Rs 4 lakh. This states that for a car priced at Rs 10 lakh, car owner in Delhi pays only Rs 40,000 as road tax. In Haryana and Chandigarh, cars are even less costly than Delhi because here there are no percentages of road tax. Car owners in Haryana and Chandigarh have to pay a fixed amount as registration fees and road tax.
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