Custom Duty On Used Imported Cars in India

The rules and regulations in India regarding the import of non-commercial vehicles are rather strict. To give you an example, all new foreign cars can only be imported through the customs port present in Mumbai, Chennai or Kolkata, while used foreign vehicles can only be imported through Mumbai. Thus, you can already get an idea that importing cars to India by NRI is not a walk in the park. In the event that you are planning to move back to India permanently, then you can avail the transfer of residence scheme to save money on customs duty. In order to help you out, we have gathered a guide to help you understand the custom duty on imported cars in India and other applicable import duty on cars in India.

Tips For NRIs Planning To Import a Used Car To India

Here are the basic rules laid down by the government regarding the kind of used cars that can be imported to India. These rules generally tend to apply without exceptions, so make sure that the used car you are planning to import will comply with all these rules:

  • It should have been manufactured 3 or more years ago to qualify as a used vehicle.
  • It must not have been sold, leased or loaned before its importation.
  • It should carry a road worthiness certificate, valid for at least 5 years after the date of importing.
  • It should have a right-hand steering, headlights and other controls suited to driving on the left side of the road
  • The speedometer should display kilometers per hour.
  • It can only be imported through Mumbai customs office.
  • It must conform to the rules laid down in the Central Motor Vehicles Act of 1988.
  • Its cylinder capacity should be no more than 3,000 cc.

Tips for NRIs Planning To Import a New Car To India

The government has the following rules for importing a new car to India:

  • It should be completely manufactured and assembled outside India.
  • It can only be imported from the country in which it has been manufactured.
  • It should not have been registered, sold or loaned before importation.
  • It must have a right-hand steering, and all other controls must be suitable for driving on the left side of the road.
  • The speedometer should display kilometers per hour
  • It should conform to the provisions of the Central Motor Vehicles Act of 1988.
  • It can be imported through Mumbai, Chennai or Kolkata.

Importing Cars For NRIs returning to India For Permanent Settlement

NRIs who are returning to India after a stay abroad may avail the “transfer of residence” for permanent settlement. Under this, you are allowed to import one car or motorcycle (new or used), provided your situation meets the following criteria:

  • You have lived abroad for at least two years, and plan to stay in India for one year at least. Your stay in India during the past two years should not have exceeded the duration of six months.
  • You have not imported another vehicle under this scheme during the past three years.
  • Only one member of a family can import a vehicle under this scheme.
  • Your new or used car with an engine capacity of 1,600 cc can be imported. But if it exceeds this amount, the vehicle should have been registered in your name, and should have been driven by you for at least one year.

Custom Duty On Used Imported Cars in India

If you are planning to avail this facility, then here is what you should know about the customs rules.

  • Customs duty is calculated after deducting the cost of inflation. The maximum depreciation allowed in India is 70% of the new car price.
  • The depreciation on used cars is calculated as follows:
  • 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, and thereafter - 2%
  • You can pay the customs duty either through foreign exchange, or through money from your NRE/FCNR account.

Now that you have an idea about the custom duty on used imported cars in India and the import duty on cars in India, you have already won half the battle. Your import duties will vary, depending on whether you are importing a used car or a new car. Your custom duty will also vary depending on whether you are transferring your residence to India or whether you just want to bring your foreign car to India. Whatever your situation may be, we hope we have helped clarify the rules and regulations regarding importing cars to India by NRI. In case you face further doubts or have any queries, please leave us a comment in the section below, and we will get back to you.

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