Vehicles are not Luxury, Hi GST only for Luxury Vehicles

· Tax Electronic Vehicles in Merit Goods

“While for a long time there were only two rates of excise duties on passenger cars, in recent years, the bigger car rates have fragmented and today we have four rates for passenger cars excluding electric vehicles and hybrid electric for which lower rates are applicable. In view of the current scenario, there is a need to look at GST rate for automobiles sensitively,” SIAM said in a statement.

There should be only two rates for conventional vehicles. Standard GST rate should be applicable on small cars, MUVs, two-wheelers, three-wheelers and commercial vehicles. Cars other than small cars should attract a GST rate which is 8 per cent more than the standard rate, it added.

It further said there must “also a lower GST rate for electric vehicles, hybrid electric vehicles and other alternative fuel vehicles, which should be at least 8 per cent less than the standard rate.”

Stating that the Automobile industry operates ‘at the frontier of technology’ improving the overall level of technology of a nation leading to better job opportunities, SIAM said its “members have committed to building the nation responsibly and as such no automotive product should be clubbed with goods that are health hazard, like cigarettes, pan masala, liquor, etc.

Area Based Exemptions

Commenting implications of GST on incentives given to companies to set up units, SIAM said many of its members have made huge investments in locations falling under Area Based Exemption scheme in places like Uttarakhand and Himachal and the period of the scheme is still not over and “as such there is a need to protect the benefits to those units under GST regime till the end of the scheme“.

Include Road Tax and Vehicle Registration

In addition, road tax and registration tax still remain outside the GST framework. “This will further burden the consumer and road taxes needs to be subsumed in GST,” it said.

No Comment on Fuel

SIAM has chosen not to comment on the five Petroleum Products which remain outside the GST ambit. These items can be included under GST but from a date decided by the GST Council.