Siam seeks merging of multiple taxes into single excise duty for auto sector

As the Indian automobile industry is highly taxed with various levies adding up to 77 per cent of the cost of vehicles, the government should rationalise the tax structure, merging multiple taxes into a single excise duty.

The Society of Indian Automobiles Manufactures (Siam), in a pre-budget presentation to the finance ministry, urged that the road tax must be subsumed in the proposed Goods and Services Tax (GST) to prevent state governments from tweaking it further to raise revenues, as is being done today.

According to the auto industry lobby, besides basic excise duty (of 12.5 per cent, 24 per cent, 27 per cent and 30 per cent), the industry also has to pay automobile cess of 0.125 per cent and a National Calamity Contingent Duty (NCCD) of one per cent.

Siam sought rationalisation of excise duty, with just two rates for motor vehicles.

It called for the withdrawal of the NCCD, as "including motor vehicles, which provide mobility, in the discouraged category with tobacco is not fair and equitable."

According to Siam, "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 per cent as is the present rate.  All other passenger vehicles should be levied excise duty of 20 per cent.

Citing the Kelkar committee report, it suggested that all kinds of domestic indirect taxes including road tax, R&D cess and octroi should be subsumed in the proposed GST.

The auto industry body said that after introduction of GST, no additional taxes should be introduced or levied. "A provision should be made in the law that no new levy or tax can be introduced," it added.

Source : BS Motoring