sales but would also increase the government’s revenue by way of taxes due to increased sales. The basic tax exemption limit may be aligned to Rs 3 lakh for individuals to enhance disposable income in lower- and middle-income brackets, which could stimulate demand in the sector.
With India’s global image already facing a dent for unstable tax environment over last few years, it is expected that issues that have been settled are not unsettled through retroactive changes. Definitive steps should also be taken for the introduction of DTC, GST, finalisation of tax accounting standards and the new Companies Bill, after considering suggestions provided by stakeholders to stabilise the tax and investment regime. This would help in consolidation of India’s position as a favourable destination for auto sector investment. However, one will have to wait and watch whether the finance minister takes the front seat to drive growth momentum of the automotive industry by unleashing some ‘out of box’ reforms.
The author is tax partner, automotive services, Ernst & Young. Views expressed are personal. Chetan Kakariya, senior tax professional, Ernst & Young, contributed to the article