FM rules out tax sop for big cars

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Dashing hopes of big car-makers for an excise duty at par with small cars, finance minister P Chidambaram has ruled out extending tax concessions to larger vehicles.

The FM also said the government will take a call on notifying the Commodities Transaction Tax (CTT) and added that there was no move to imposing ban on the futures trading of more commodities.

Chidambaram said there was no scope for reducing duties on imported hybrid vehicles, although government could consider giving more tax incentives if they were manufactured in India.

“We are not giving any tax concessions to big cars because they are fuel in-efficient compared to the small car,” Chidambaram said. The FM said the concessions to the small cars were given on the ground that ‘they are fuel-efficient’.

The government has been gradually decreasing excise duty on small cars as part of plans to make India a global manufacturing hub. In 2006. Chidambaram had cut excise on small cars to 16% from 24% and this year’s Budget had brought it down further to 12%.

Asked if there were plans to extend tax incentives to imported hybrid cars, Chidambaram said the government would do so only if they were manufactured in India.

“Oh yes, we will take a look at hybrid cars when they begin to manufacture them (in India),” he said. Chidambaram said the government will take a call on notifying the CTT and ruled out imposing a ban on the futures trading of more commodities.

“We will see...At least in the first year, it is not intended to be a great revenue-earning measure. We can take a call on the date,” he added.

Asked whether ban on futures trading would help in containing food prices, the finance minister said, “According to the expert committee, there is no connection between banning forward trading and prices.”

“Regardless of the expert’s view, we have banned forward trading. You can call that wise economic decision or a wise political decision, we have taken that decision. But expert says there is no causal connection between one and the other,” he said.

On the recent bear hug, the FM said stock markets could not be insulated from external developments but ruled out any role for the government and the regulator as long as the price movement was orderly. At the same time, he dubbed as ‘very good’ the returns for investors since the UPA government came to power.