Budget 2018: One of the largest markets for automobiles in the world, India currently ranks fifth in the world market for cars and leads the ways for two-wheelers and motorcycles as the largest market in the world. With a market that grows at this rate and an industry that alone contributes to 7% of India’s Gross Domestic Product, it natural that in the run-up to the Budget 2018, the Automobile sector is likely to be big on everyone’s mind.
Earlier in the year, SIAM made a statement urging that all-passenger vehicles be brought under two distinctive tax slabs under the GST (Goods and Services Tax) as opposed to the multiple tax slabs that we currently employ. Additionally, small petrol cars under 1,2 l get taxed at 28% GST and 1% cess while small diesel which get taxed at 28% GST in addition to a 3% cess and while the remaining cars including hybrids attract 15% Cess in addition to the 28% GST. The SIAM has once again moved the government to abolish the cess applicable on these categories, but it is likely that instead of an entire removal of cess, the government might look to standardise slabs, with fewer variations.
The SIAM has also advised the government to provide an accurate representation of the various import routes, including CKD (completely knocked down) and SKD (semi knocked down) units, while they also asked that no concession be given to CBU imports of EVs to support the Make in India project, while protecting Indian manufacturers.Finally, the need of the hour considering the government’s shift to EV policy. And this should be one of the key areas of focus for the union budget 2018, the government needs to incentivize the shift adding more benefits for manufacturers and buyers alike!
Speaking on the upcoming union budget 2018, Tata Motor’s spokesperson said “While an array of policies and reforms like the Automotive Mission Plan, Make in India and Smart Cities have had a positive impact on the industry, regulatory uncertainties in the face of Demonetization, BS III to BS IV transition and a few provisions of GST have caused disruptions in the market. We expect the new budget to help boost consumer sentiments and define a tax structure that will support the overall ecosystem. Rationalization of tax slabs and reduction of cess by the Government will be a key step in this direction. A well-defined budget with a specific focus on the promotion of infrastructure will provide the much-needed Impetus to the Commercial Vehicle segment. With reference to Passenger Vehicles, we look forward to the implementation of two tax rates as opposed to the multiple tax rates levied currently.”
The spokesperson also addressed the issue of EVs and sustainable mobility ahead of the budget 2018“Sustainable mobility is the need of the hour. While there has been a considerable push towards electrification and alternative fuel technology, we look forward to policies to make this segment attractive and viable for the end user and help smooth implementation of electrification, furthering the Government’s vision of Smart Cities. We would expect to see a cohesive view emanating from the government on the regulatory roadmap with a full 5-10 year view that will help manufacturers prepare for this change in a planned manner.”
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