How Much Does a BMW Car Cost After Union Budget 2025 Reduced Customs Duty on Imported Cars?

The world is swiftly moving towards reducing tariffs on imports from the US, and India seems to be leading the charge. In the 2025 Union Budget, Finance Minister Nirmala Sitharaman announced a notable reduction in the Basic Customs Duty (BCD) for bikes and cars above USD 40,000, slashing it from 125% to 70%.

But what does this mean for domestic buyers, and how much revenue is the government potentially losing due to this reduction? To understand this better, let’s break down how this reduction affects the luxury car market, especially for brands like BMW.

What is the Custom Duty on Imported Cars After Budget?

The customs duty on imported cars priced above $40,000 (approximately ₹35 lakh) has been cut from 125% to 70%, with the 10% Social Welfare Surcharge also eliminated entirely.

For BMW buyers, this change translates into a price drop for their imported models, particularly for high-end variants that fall into this category. This could make BMW cars more affordable for Indian buyers, as the reduced customs duty directly impacts the overall cost of these vehicles, making them more competitively priced compared to earlier.

However, the budget introduced a 40% Agriculture Infrastructure and Development Cess (AIDC), replacing the previous surcharge, thus keeping the overall duty at 110%. While this change may seem promising for buyers, the impact for car buyers is largely neutralised due to the new AIDC.

Agriculture and Development Cess Added

The Agriculture Infrastructure and Development Cess (AIDC) was introduced in a previous Union Budget to strengthen agricultural infrastructure. Initially, it was applied to items such as gold, silver, alcohol, and crude palm oil, but vehicles were left out. Now, AIDC is being included in the overall duty calculations.

This change in the taxation system reflects a broader shift aimed at boosting the central government’s revenue. While the Basic Customs Duty (BCD) is shared between both the central and state governments, the AIDC is solely collected by the central government.

Impact of Customs Duty Cuts on Imported Motorcycles and Brands Like Harley Davidson

The import duty on motorcycles with engine capacities up to 1,600 cc that are imported as completely built-up (CBU) units has been reduced from 50% to 40%. For larger motorcycles with engine capacities over 1,600 cc, the duty reduction is even more significant, dropping from 50% to 30%.

Harley Davidson motorcycles, known for their powerful engines, typically have engine capacities well above 1,600 cc, meaning they will benefit from this larger reduction in import duties.

The recent Budget has cut customs duties not just for larger motorcycles over 1,600cc but also for smaller imported models from brands like Honda, Suzuki, Ducati, and KTM.

Furthermore, the import duty on semi-knocked down (SKD) kits has been lowered from 25% to 20%, while the duty on completely knocked down (CKD) units has been reduced from 15% to 10%, as announced in the Union Budget presented on Saturday.

Conclusion

In conclusion, the recent changes in import duties as announced in the Union Budget 2025 are a mixed bag for vehicle buyers. While the reduction in Basic Customs Duty (BCD) on cars over USD 40,000 may seem beneficial at first glance, the introduction of the Agriculture Infrastructure and Development Cess (AIDC) significantly largely offsets potential savings. This shift aims to increase the central government’s revenue but has altered the dynamics of the import duty structure, particularly for luxury cars.

On the brighter side, there’s a notable relief for motorcycle enthusiasts. The reduction in duties across all categories—complete built units (CBUs), semi-knocked-down (SKD), and completely knocked-down (CKD) units—has made imported bikes more affordable.

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