Driving your foreign car in India is a luxury dream; however, it can very much be a nightmare in the form of money in your pocket, as long as you have not been made aware of the import taxes. This is because India charges very high import taxes on foreign vehicles, which can be as high as 125% of the car’s value.
However, what if you could bring your car into India legally and drive it without paying these taxes?
Yes, it’s absolutely possible. Let’s break down how.
Introduction to Import Duty on cars in India.
Before we explore the loopholes and legal exemptions, it’s important to understand why the government charges so much.
In the case of a permanent import of a foreign vehicle into India, the customs duties of the import are imposed, and they include:
- Basic Customs Duty (BCD): 60%–100%
- Social Welfare Surcharge: 10% on duty.
- GST + Cess: approximately 28 % + 15 % (luxury cars).
- Registration fees and road taxation.
So, if you’re planning a short stay or temporary visit, paying this much doesn’t make sense, and thankfully, you don’t have to.
1. The Carnet de Passages en Douane (CPD):
A Carnet de Passages en Douane (CPD) is the most recognised and generally accepted method of legally driving a foreign car in India without paying import duty.
What is a Carnet?
A Carnet de Passages is an international customs document that is referred to as a passport to your car. It enables you to temporarily bring your car to another country without any import taxes or duties, provided the car is removed out of the country within a stipulated time.
Who Can Use It?
- India is visited by tourists in their personal vehicles.
- The foreigners who move on a temporary basis.
- Indian nationals coming back home after spending some time in foreign .
Key Rules:
- The vehicle should be registered in a foreign country.
- The owner needs to possess a valid international driving license.
- The car should leave India in a span of 6 months, with the exception of 1 year in exceptional cases.
- In India, there is no sale, transfer, or rental of cars.
How to Get a Carnet
A Carnet is available in your automobile association in your home country, e.g.
- AA UK (Automobile Association)
- ADAC Germany
- AAA USA
- Part 3 Associations affiliated with FIA.
In India, there are the Automobile Association of India (AAI) and Federation of Motor Sports Clubs of India (FMSCI), which help to process and check the carnet entries.
2. NRIs and Diplomats Purchasing Temporarily.
When you are a Non-Resident Indian (NRI) or a foreign diplomat, there is a special provision in the form of the Customs Act, 1962, which enables you to temporarily import cars without paying duty, but under very stringent conditions.
For NRIs:
- The car has to be shipped under an ATA Carnet or a temporary import bond.
- It can remain in India for up to 6 months to 1 year, depending on the visa.
- The car should not be sold, transferred, or handed over to be used locally.
- Customs will keep in deposit or in the form of a bond an amount of money which will be refunded after re-export of the car.
For Diplomats:
- Foreign diplomats or embassy representatives have the privileges of a duty-free status under the Vienna Convention on Diplomatic Relations.
- They can import their vehicles without any duty.
- The car is allowed to be sold, however, with the requirements of the customs clearance and the approval of the Ministry of External Affairs (MEA) upon completion of tenure.
3. Importing a Foreign Car through Temporary Vehicle Import Permit (TVIP)
It is also in India that temporary vehicle import permits are accepted by some of visitors, especially the neighboring nations like Nepal, Bhutan, Bangladesh and Myanmar.
How it Works:
- The citizens of these countries are allowed to cross the border using a Temporary Vehicle Import Permit (TVIP).
- No duty on imports is imposed provided that the car leaves India before the permit expires.
Duration: The average is usually 30-180 days, depending on the purpose and area.
Documents required:
- Vehicle registration certificate (foreign)
- International or national driving license (valid)
- Insurance valid in India
- Copy of passport and visa
4. Imported Vehicles for Exhibitions or Events
In the event that your car is going to India to participate in a motor show, race, rally, or an exhibition, you can also submit an application to have a duty-free temporary import under certain customs exemptions.
Conditions Include:
- Import was permitted in case of non-commercial use (display or event).
- Should be re-exported within a means of time.
- Bond or bank guarantee of an equal amount with the value of the import duty required.
- Permission required by the Directorate General of Foreign Trade (DGFT) or other ministry.
It is frequently applied to the brands of automobiles and motorsport teams.
5. Nepalese or Bhutanese-registered drivers drive foreign cars.
Due to the bilateral agreements, the people of Nepal and Bhutan have been allowed to drive their cars in India without incurring an import duty.
- No customs tax is imposed in case the stay is temporary.
- The driver should have valid vehicle papers, a license, and insurance.
- An official permission by the local RTO or border authorities may be required in case of a longer stay.
The arrangement is founded on the existence and friendly border movement policies between India and these countries.
6. Re-Export Rules: Why Compliance Is Crucial
A foreign car driven in India under such exemptions would have a strict re-export liability.
In case you do not remove your car on time within the allowed time, the authorities will consider it a permanent import, and you will be required to pay complete import duty + penalty.
Customs can also:
- Seize your vehicle, or
- internationally blacklist your Carnet documents.
So, have your exit stamped always at the port or border check-post where you leave India.
Conclusion
It is quite legal to import a foreign car in India and drive it without paying any import duty, however, under certain, time-limited circumstances. You are either a world traveler visiting India, an NRI who comes home or a foreign diplomat; in all the cases, documentation and adherence are the most important factors.
Understanding how Carnet de Passages, temporary import permits, and customs exemptions work can save you from massive costs and legal trouble. Follow the process carefully, and you can enjoy your foreign wheels on Indian roads — legally and hassle-free
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FAQs
1. Can I permanently import my foreign car into India without paying duty?
No. Permanent import of foreign vehicles always attracts customs duty. Only temporary imports qualify for duty-free status.
2. How long can I keep my foreign car in India under Carnet?
Generally 6 months, extendable up to 1 year in certain cases with customs approval.
3. Can I sell my foreign car in India?
No. Cars imported temporarily under a carnet or permit cannot be sold or transferred within India.
4. Do I need Indian insurance to drive a foreign car here?
Yes. Your car must have valid third-party insurance recognized in India.
5. What happens if I don’t re-export my car on time?
You’ll be liable to pay full import duty, penalties, and risk vehicle confiscation.
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