The central authorities have now set to reduce the tax levied on passenger vehicles with engine capacity equal to or below 2.0 liters.
The revised proposal would lower the tax on cars with engines between 1 and 1.6 liters to between 300 to 540 yuan. This is down from the 360 to 660 yuan range in the previous rules.
Meanwhile, the tax levied on cars with engines larger than 2 liters will be increased to around 54-hundred yuan.
Revision to the current tax was first put forward in October, but had been widely criticized, given that over 70 percent of the passenger vehicles on road would have been subject to the tax.
Professor Zhu Qing from Renmin University says the revised draft will reduce the tax for the majority of drivers.
Zhu Qing said, "If we go with the second amendment, about 87 percent of car owners won't see any increase in their tax, and only about 13 percent of people with gas-guzzling cars need to pay more. So, this version makes more sense regarding the fairness and the encouragement on fuel-efficient vehicles."
China's auto sales increased 30 percent last year to more than 18 million units.
The central government has been trying to promote the purchase of energy-saving small cars and green energy vehicles.
