Besides, all passenger cars irrespective of fuel, engine capacity and size should attract the same rate, 12 per cent, of excise duty, FADA said its pre-budget expectations, submitted to Union Finance Minister Arun Jaitley last week.
Stating that domestic auto market continues to reel under acute slowdown, the Federation also sought some other tax sops such as increasing depreciation allowance on passenger vehicles across segments to 33 per cent citing shortening of product/ownership cycle crashing of used vehicle prices.
A recent survey by Frost & Sullivan said declining sales, negative customer sentiments and unclear future growth has made the business climate more difficult not only for the vehicle manufacturers but also for the auto dealers.
According to FADA, automobile retail trade and service industry comprises a network of 9,500 automobile dealers and their service stations engaged in sale, service/repair and spares of vehicles across segments, is an essential link in automotive business and a significant stakeholder.
This segment of automotive business having invested over Rs 45,000 crore, provides direct employment to over 7,00,000 people and contributes around Rs 70,000 crore by way of taxes, it said.
FADA also sought accelerated depreciation allowance of 60 per cent for purchase of commercial vehicles for a period of two years in the Union Budget, on the lines of one provided in 2008 following global financial crisis.
In addition, depreciation allowance on commercial vehicles purchased for replacement of over 15-year old vehicles be increased to 60 per cent to incentivise renewal and modernisation of transport fleet and sustain growth, the representation said.
Also, a vehicle life terminal policy may be framed in the interest of clean environment, road safety and better traffic flow and management, it said.
It has also demanded a roadmap for the implementation of GST in the budget, apart from seeking abolition of other local taxes including octroi.
Steps may be taken to reduce interest rates and to increase credit availability for vehicle purchase as well as working capital of automobile dealerships, FADA said in its budgetary expectations.