How Much Does a Mercedes-Benz Cost After Union Budget 2025 Reduce Customs Duty on Imported Cars?

The Union Budget 2025 has introduced significant changes to the import duties on luxury vehicles. With a notable reduction in the Basic Customs Duty (BCD) for cars priced above $40,000 (approximately ₹35 lakh), premium brands like Mercedes-Benz are set to witness an impact on their pricing in India.

But how much will this affect the final price tag of a Mercedes-Benz? Let’s break it down.

What is the Custom Duty on Imported Cars After Budget 2025?

The government has reduced the customs duty on completely built-up (CBU) cars priced above $40,000 (approximately ₹35 lakh) from 125% to 70%. Additionally, the 10% Social Welfare Surcharge has been eliminated, making luxury cars more affordable than before.

For Mercedes-Benz buyers, this change translates into a potential price reduction for imported models like the Mercedes-Benz S-Class, GLE, GLS, and other high-end variants.

Introduction of Agriculture Infrastructure and Development Cess (AIDC)

However, the government has introduced a 40% Agriculture Infrastructure and Development Cess (AIDC) to balance revenue collection. This change, while lowering the impact of the previous high import duties, still keeps the overall duty at 110%.

The introduction of AIDC ensures that while luxury cars become more affordable, the central government still retains a share of revenue. Unlike the previous Social Welfare Surcharge, AIDC is collected solely by the central government.

This move signals a strategic shift in taxation policies toward infrastructure development rather than direct luxury taxation.

How Does This Compare to Other Luxury Car Brands?

While Mercedes-Benz stands to benefit from these changes, similar reductions will apply to other luxury car manufacturers like BMW, Audi, and Porsche.

Conclusion

The reduction in customs duty under the Union Budget 2025 has led to a more competitive pricing structure for imported luxury vehicles, including Mercedes-Benz models. However, the introduction of the Agriculture Infrastructure and Development Cess (AIDC) offsets some of these benefits, keeping the overall duty at 110%. While this change makes high-end models more accessible to buyers, the taxation structure continues to balance affordability with government revenue considerations.

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