Shanghai, January 19 (Gasgoo.com) China's drivers who trade in their old vehicles for a new, clean, small car will be eligible for both a subsidy and a lower purchase tax, the commerce and finance ministry said Monday, media reported.
The Chinese government had agreed that from the beginning of this year, buyers of cars with a 1.6 liter or smaller engine are subject to 7.5% purchase tax. That's 2.5% lower than the original level.
While those who turn in their used car as they plan to buy a new one, can now receive a subsidy of up to 18,000 yuan ($2,640), up from the previous 5,000 yuan ceiling limit.
Previously, consumers couldn't benefit from both incentives -- those who replaced their old, polluting vehicles with a vehicle with an engine 1.6 liters and smaller weren't eligible for the lower purchase tax.
Local authorities are urged to promote the policies, as tax cuts and subsidies are used as a major boost to the market, pushing China's auto sales last year to 13.6 million, up nearly 60%.
China partially rolled back the purchase tax discount for small cars to 7.5% this year. One year ago the tax was halved to 5%.
