SIAM wants roll-back of extra tax on SUVs

Says the definition used to define the category has led to a lot of ambiguity

Automobile industry body SIAM today said it will ask Finance Minister P Chidambaram to reconsider the decision to impose extra excise duty on sports utility vehicles (SUVs), while stating that the definition used to define the category has led to a lot of ambiguity.

"The higher excise duty on SUVs was totally uncalled for. This was the only segment which was showing some growth. We had a post Budget meeting of SIAM members and it was unanimously decided to ask the FM to reconsider the decision," Mahindra & Mahindra President (Automotive and Farm Equipment Sectors) Pawan Goenka, who is also the ex-President of SIAM told PTI.

Society of Indian Automobile Manufacturers (SIAM) said the industry did not expect the rise in excise duty on SUVs used as personal vehicles and hiking price of these vehicles would dampen sales and impact market sentiments further.

Goenka further said the definition of SUV, as described in the Budget notification will lead to a lot of ambiguity.

"Our concern is that among vehicles in the same price category, one may have to pay the higher excise duty and other may not," he said.

Chidambaram yesterday proposed to hike the basic customs duty to 100% from 75% earlier on luxury vehicles with prices over USD 40,000 and engine capacity exceeding 3,000 cc for petrol and 2,500 cc for diesel options.

While presenting the Budget, he said: "SUVs occupy greater road and parking space and ought to bear a higher tax. I propose to increase the excise duty on SUVs from 27% to 30%. However, the increase will not apply to SUVs registered as taxis."

On the import duty hike on luxury vehicles, he said the affluent class in India consumes imported luxury goods such as high-end motor vehicles, motorcycles, yachts and similar vessels, he expressed confidence that "they will not mind paying a little more".

He also proposed to hike the import duty on motorcycles with engine capacity of 800 cc or more to 75%. However, excise duty on truck chassis is proposed to go down to 13% from 14%.

To boost manufacturing of environment-friendly vehicles, Chidambaram proposed to continue and extend the currently available concessions on specified parts of electric and hybrid vehicles till March 31, 2015.

In Budget for 2012-13, the excise duty on specified parts of hybrid vehicles was reduced to 6% from 10%. Excise duty on lithium ion battery packs for electric or hybrid vehicles was also cut to 6% from 10%.

Besides, the full exemption from basic customs duty and special CVD with concessional excise duty or CVD of 6% on some parts of hybrid vehicles was extended to specified additional items and lithium ion batteries imported to make battery packs for electric or hybrid vehicle.