Industry body Automotive Component Manufacturers Association (ACMA) has urged the Centre to implement a uniform GST rate of 18 per cent on all auto components.
In its recommendations for the forthcoming Union Budget, the ACMA requested the government to consider the upward vision of 'RoDTEP' (Remission of Duties and Taxes on Exported Products) rates along with adopting measures for enhancing investments, including that for R&D.
"The auto component industry, being an intermediary, has recommended for a uniform GST rate of 18 per cent on all auto components," ACMA President Sunjay Kapur said.
"The industry has significant aftermarket operations that are plagued by grey operations and counterfeits due to the high 28 per cent GST rate. A moderate rate of 18 per cent will not only address this challenge but will also enhance the tax base through better compliance."
Furthermore, the industry body pointed out that current RoDTEP rates for auto components sector is at 1 per cent or lower, and said that these rates are inadequate to cover the incidence of unrefunded taxes and duties borne on export products.
"This is deterring the competitiveness of the Indian auto component industry," the ACMA said.
Additionally, it asked for provision to reintroduce investment allowance at 15 per cent for manufacturing companies that invest more than Rs 25 crore in plant and machinery.
"This will motivate manufacturers to invest in new technologies, specifically e-mobility and its components or ancillaries related plant and machinery," the industry body said.
In addition, it recommended to retain the weighted tax deduction on R&D expenditure.
"The 2016-17 Budget reduced weighted deduction benefit from 200 per cent to 150 per cent and has further restricted the deduction to 100 per cent from 1st April 2020."
"The association has also put forth several suggestions to 'ease' acost of doing business' in India."
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