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Indian automotive industry is highly taxed adding to 77% of the costs: SIAM

Indian-auto
Posted: January 12, 2016 at 2:12 pm   /   by   /   comments (0)

Stating that the automotive industry in India is “highly taxed” with levies accounting for up to 77% on cost, Society of Indian Automobile Manufacturers (SIAM) has asked the government to merge multiple taxes into a single excise duty.

The automotive industry body, in its pre-Budget presentation to the Finance Ministry, also said that Road Tax must be subsumed in the goods and service tax (GST) in order to prevent state governments “tweaking it to raise further revenue as is being done today”.

Besides, the SIAM said the 1% NCCD (National Calamity Contingent Duty) on vehicles should be withdrawn saying “including motor vehicles, which provide mobility, in the discouraged category with tobacco is not fair and equitable”.

Stressing on the need to give the sector a relief from tax burden, SIAM said, “Automotive industry in India is a highly taxed sector, taxation accounts for up to 77% on cost. It has one of the highest taxed manufactured products in India.”

On the issue of multiple taxation, SIAM said currently levies applicable on vehicles included basic excise duty – 12.5%, 24%, 27% and 30%; automobile cess of 0.125% and NCCD of 1%. These multiple levies should be merged into a single head under excise duty, it said. The industry body is also of the view that there must only be two rates for excise duties on motor vehicles.

“Small cars/vehicles, two-wheeler, three wheeler, goods vehicle, chassis for motor vehicles, passenger vehicle designed for carrying 10 or more persons should attract lower duty (of) 12.5% as is the present rate,” SIAM said, adding all other passenger vehicles be levied excise duty of 20%.

Looking forward to introduction of GST, SIAM said, “All kinds of domestic indirect taxes, including Road Tax, R&D Cess and Octroi should be subsumed in the proposed GST, as suggested by the Kelkar Committee.”

For the vehicle industry the most important is ‘Road Tax’, which could undermine the entire benefit of GST unless it is subsumed in the overall GST rate, it said.

“Unless Road Tax is subsumed in GST, state governments will continue tweaking with the Road Tax rates to raise further revenue as is being done today. Today there are states which are charging Road Tax as high as 14 per cent, 18%, 20%, etc,” SIAM said in its pre-Budget presentation.

 

Source: www. dnaindia.com

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