While the Delhi Government may have made it illegal to drive fifteen-year-old cars, enforcers of the law have been crippled by the system that they strive to uphold, as the three scrap piles for seized cars overflow with no signs of clear scrappage policy insight. The Automotive industry, at a budget meeting with the heavy industries ministry, asked that the government provide a one-time incentive in the form of tax rebate for those scrapping their 15-year-old vehicles. Additionally, the Industry also asked the government to provide a modicum of relief to the multiple tax rates being imposed on passenger cars and asked for a special taxation system for electric vehicles, in lieu of the delayed FAME 2 scheme.
It makes sense that the Auto Industry is pushing for the rebate and removal of 15-year old vehicles as this means for every vehicle is taken off the road a newer one from one of their showrooms will replace it, that is if the owner wants to receive benefits of scrappage. Considering tax rates at present, this is no small offer, since scrappage of even full-size SUVs could return no more than Rs 50,000. Of course, the benefits will be in addition to what you get from your scrap dealer for the metal weight of the vehicle. With Tax rates at an all-time high, having been raised from 10 per cent in 2011-12 on small vehicles, commercial vehicles, two and three wheelers, it has gone up to 12.5 per cent in 2015-16, whereas on larger cars it has increased from 22 per cent to 30 per cent during the same period.
In addition to this, the Government also expressed interest in bumping customs duty for CBUs of commercial vehicles to 40 per cent from 20 per cent currently. Finishing up their Christmas list, the Auto industry also lobbied for the government to restore 200 per cent weighted deduction on R&D expenditure. The benefit was reduced to 150 per cent in April 2017 and is to be completely eliminated by April 2020.
