Budget Wishlist: Auto Industry Seeks only Two Tax Rates for Passenger Vehicles

The Society of Indian Automobile Manufacturers (SIAM) is seeking two tax rates for passenger vehicles under the GST regime instead of multiple rates levied currently, as part of its wishlist for the upcoming Budget. The industry body has also sought a special tax rate of 12 per cent for electric and hydrogen fuel cell powered vehicles.

“The automotive industry has been suggesting two rates for cars in the place of multiple tax rates, and requests the government to keep only two rates for vehicles under the GST regime,” SIAM said in its suggestions for the Union Budget 2018-19.

Currently, under the Goods and Services Tax (GST) regime, small petrol cars with an engine capacity less than 1,200 cc attract 1 per cent cess, while diesel cars with an engine capacity of less than 1 500 cc attract 3 per cent cess, on top of the 28 per cent tax. Similarly, cess on hybrid cars, including mid, large and SUVs, remains at 15 per cent, likewise those vehicles used for transport of not more than 13 passengers.

The auto industry wants the tax rate on used cars to be fixed at 5 per cent GST on the differential value between sale and purchase price of the used car. Similarly, in the electrical vehicle vertical, the industry has sought extension of Custom duty concessions for additional critical components.

Besides, it has sought denial of any Custom duty concessions to CBUs (completely built units) of electric vehicles to support ‘Make in India’ programme. The industry body has also asked the government to clearly provide definition of CKD (completely knocked down)/SKD (semi-knocked-down) units of electric vehicles. SIAM also wants the Finance Ministry to exempt 10-13 seater ambulances from the levy of compensation cess.