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Import of Used Cars in India | Company Vakil

 

Meaning of Used Car

Used car or second hand vehicle shall mean a vehicle that:

  1. Has been sold, leased or loaned prior to importation into India; or
  2. Has been registered for use in any country according to the laws of that country, prior to importation into India

Procedures

Cars are imported when you are transferring residence into India. If you are possessing a car for more than one year then there is no cc limit for old and used cars. There is no need for import license required for importing cars and other vehicles in India.

Following are some provisions that need to be taken care of while importing used cars in India:

  • The importer before coming to India for settling permanently, should have continuously stayed in abroad for a period of 2 years
  • Payment of car has been done at abroad
  • Car has been in use for at least 1 year before coming to India
  • After 6 months of arrival of importer’s in India, the car should be imported
  • Custom duty should be paid in foreign exchange
  • Importer is free to resale the used car after coming in India without any restrictions
  • If the importer moves out of India, importer can import another vehicle only after 5 years.
  • Import duty by a handicapped persons can be paid in rupees & the car cannot be sold without the permission of government.
  • For each imported vehicle, import of spares up to a value of Rs 20,000 is allowed with license.
  • Import duty is applied on the basis of list price prevailing (Trade discount & depreciation on the value are deducted from price list but freight, insurance & landing charges are added.

Guidelines

Following are the guidelines given by Government of India for the import of car in India :

  • Used car or second hand car shall not be older than 3 years from the  date of manufacture
  • The used car or second hand car should have right hand steering, controls, speedometer and photometry of the headlamps
  • Used car or second hand car shall be according to rules & provisions of Motor Vehicle Act, 1988
  • Import of second hand car shall be allowed only through customs port at Mumbai
  • Imported Used car should have minimum roadworthiness for a period of 5 years from date of importation in India. At the time of importation, every car need to be supported by certificate of testing agency which Central Government may notify and a declaration indicating period of roadworthiness.

Testing agencies of Imported Vehicles

  • Vehicle Research and Development Establishment (VRDE), Ahmednagar
  • Ministry of Defence or the Automotive Research Association of India, Pune
  • Central Farm and Machinery Training and Testing Institute, Budni, Madhya Pradesh
  • Other notified testing agency authorised by the Indian Government.

Banned Vehicles

Import of cars whose engine capacity ranges from 1000 to 2500 cc is banned according to the policy.

Rules for importing a car to India by Non Resident Individual (NRIs)

Importers who are returning to India for the purpose of permanent settlement and want to import the used car in India after payment of full custom duty, following are the conditions one need to fulfil:

  1. Continuous stay in abroad for 2 years and possession of car for minimum 1 year
  2. Resident Indians gifted with a car as an award in any international event, match or competition.
  3. Legal heirs/successors of deceased relatives residing abroad.
  4. Physically handicapped persons.
  5. Companies incorporated in India & have foreign equity participation.
  6. Branches and offices of foreign firms.
  7. Registered Charitable/Missionary/Religious institutions
  8. Honorary Consuls of foreign countries on the recommendations of the Ministry of External Affairs, Government of India.
  9. Journalist foreign news agencies having accreditation certificate with the Press information bureau, Ministry of Information and Broadcasting of the Government of India.             
  10.     All the above categories shall be allowed to import only one vehicle except category 5 & 6 which shall be allowed to import a maximum of three vehicles.

All such imports are not for resale for a period of 2 years.

Also, the DGFT may relax these conditions in special circumstances.

Tips for Importing used Cars

  • Always hire a custom broker for speedy and easy importation
  • Selling a car in India will help you gain profit

Customs Duty on second hand cars in India

Showing discounted invoice will not be sufficient for calculation of customs duty in India. To calculate duty on second hand cars, depreciation is allowed from new car price based on how old the car is. When you import second hand car to India, to calculate the customs duty, first custom officers need to determine value of second hand car and then allow depreciation which is based on the age of the car.

Depreciation allowed on used cars for calculating Customs Duty

I year, every quarter 4%

II year, every quarter 3%

III year, every quarter 2.5%

IV year, every quarter 2%

Note: Maximum depreciation allowed on used cars in India is 70% based on the new car price.

Conclusion

Many individuals are bringing the used cars in India for the purpose of resale, as people of India, specially the upper class are fond of foreign class and wish to add to their collection. Hence the demand of foreign cars is high and can be sold at a very good margin.

Meaning of Used Car

Used car or second hand vehicle shall mean a vehicle that:

  1. Has been sold, leased or loaned prior to importation into India; or
  2. Has been registered for use in any country according to the laws of that country, prior to importation into India

Procedures

Cars are imported when you are transferring residence into India. If you are possessing a car for more than one year then there is no cc limit for old and used cars. There is no need for import license required for importing cars and other vehicles in India. 

Following are some provisions that need to be taken care of while importing used cars in India:

  • The importer before coming to India for settling permanently, should have continuously stayed in abroad for a period of 2 years
  • Payment of car has been done at abroad
  • Car has been in use for at least 1 year before coming to India
  • After 6 months of arrival of importer’s in India, the car should be imported
  • Custom duty should be paid in foreign exchange
  • Importer is free to resale the used car after coming in India without any restrictions
  • If the importer moves out of India, importer can import another vehicle only after 5 years. 
  • Import duty by a handicapped persons can be paid in rupees & the car cannot be sold without the permission of government.
  • For each imported vehicle, import of spares up to a value of Rs 20,000 is allowed with license. 
  • Import duty is applied on the basis of list price prevailing (Trade discount & depreciation on the value are deducted from price list but freight, insurance & landing charges are added. 

Guidelines

Following are the guidelines given by Government of India for the import of car in India :

  • Used car or second hand car shall not be older than 3 years from the  date of manufacture
  • The used car or second hand car should have right hand steering, controls, speedometer and photometry of the headlamps
  • Used car or second hand car shall be according to rules & provisions of Motor Vehicle Act, 1988
  • Import of second hand car shall be allowed only through customs port at Mumbai
  • Imported Used car should have minimum roadworthiness for a period of 5 years from date of importation in India. At the time of importation, every car need to be supported by certificate by testing agency which Central Government may notify and a declaration indicating period of roadworthiness. 

Testing agencies of Imported Vehicles

  • Vehicle Research and Development Establishment (VRDE), Ahmednagar
  • Ministry of Defence or the Automotive Research Association of India, Pune
  • Central Farm and Machinery Training and Testing Institute, Budni, Madhya Pradesh
  • Other notified testing agency authorised by the Indian Government.

Banned Vehicles

Import of cars whose engine capacity ranges from 1000 to 2500 cc is banned according to the policy.

Rules for importing a car to India by Non Resident Individual (NRIs) 

Importers who are returning to India for the purpose of permanent settlement and want to import the used car in India after payment of full custom duty, following are the conditions one need to fulfil:

  1. Continuous stay in abroad for 2 years and possession of car for minimum 1 year 
  2. Resident Indians gifted with a car as an award in any international event, match or competition. 
  3. Legal heirs/successors of deceased relatives residing abroad. 
  4. Physically handicapped persons. 
  5. Companies incorporated in India & have foreign equity participation. 
  6. Branches and offices of foreign firms. 
  7. Registered Charitable/Missionary/Religious institutions 
  8. Honorary Consuls of foreign countries on the recommendations of the Ministry of External Affairs, Government of India. 
  9. Journalist foreign news agencies having accreditation certificate with the Press information bureau, Ministry of Information and Broadcasting of the Government of India.                          All the above categories shall be allowed to import only one vehicle except category 5 & 6 which shall be allowed to import a maximum of three vehicles.

All such imports are not for resale for a period of 2 years. 

Also, the DGFT may relax these conditions in special circumstances. 

Tips for Importing used Cars

  • Always hire a custom broker for speedy and easy importation
  • Selling a car in India will help one in gaining profit

Customs Duty on second hand cars in India

Showing discounted invoice will not be sufficient for calculation of customs duty in India. To calculate duty on second hand cars, depreciation is allowed from new car price based on how old the car is. When you import second hand car to India, to calculate the customs duty, first custom officers need to determine value of second hand car and then allow depreciation which is based on the age of the car. 

Depreciation allowed on used cars for calculating Customs Duty

I year, every quarter 4%

II year, every quarter 3%

III year, every quarter 2.5%

IV year, every quarter 2%

Note: Maximum depreciation allowed on used cars in India is 70% based on the new car price. 

Conclusion 

Many individuals are bringing the used cars in India for the purpose of resale, as people of India, specially the upper class are fond of foreign class and wish to add to their collection. Hence the demand of foreign cars is high and can be sold at a very good margin. 

Note: For related informations visit CompanyVakil.com

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