SIAM suggests GST rates for automobiles
Date: 06 Oct 2016
While for a long time there were only two rates of Excise Duties on passenger cars, in recent years, the bigger car rates have fragmented and currently there are four rates for passenger cars excluding Electric Vehicles and hybrid electric for which lower rates are applicable. In view of the current scenario, the Society of Automobile Manufacturers (SIAM) feels there is a need to look at GST rate for automobiles sensitively.
There should be only two rates for conventional vehicles, according to
• Standard GST rate should be
applicable on small cars, MUVs, Two wheelers, Three wheelers and Commercial
• Cars other than small cars
should attract a GST rate which is 8% more than the standard rate.
• A lower GST rate for
electric vehicles, hybrid electric vehicles and other alternative fuel
vehicles, which should be at least 8% less than the standard rate.
According to SIAM, the
automobile Industry has been looking forward to the GST, since in its
manufacturing process this industry
accumulates a lot of embedded taxes and duties which make manufacturing in the
country less competitive. GST regime will bring in a clean, transparent and predictable mechanism
and also help
streamline sourcing and logistics operations.
The automotive industry has
not only grown in terms of size of the industry but also developed
significantly in terms of technology and product offerings. Industry meets
significantly superior emission and safety standards today and is entering into
a regime of superior fuel efficiency through CAFE standards.
The industry has joined hands
with the government and by 2020 will leapfrog from BS IV to BS VI emission
standards and several new safety features would be added which will have huge
cost implications for the OEMs.
The automobile industry
operates at the frontier of technology and it offers superior technology not
only in the products but it improves the overall level of technology of a
nation leading to better job opportunities.
SIAM members have committed to building the nation responsibly and
as such no
automotive product should
be clubbed with
goods that are
health hazard, like cigarettes, pan masala, liquor, etc.
Many of SIAM members have made
huge investments in locations falling under Area Based Exemption scheme in
places like Uttarakhand, Himachal, etc. The period of the scheme is still not
over and as such there is a need to protect the benefits to those units under
GST regime till the end of the scheme.
In addition the road tax and
registration tax still remain outside the GST framework. This will further
burden the consumer and Road Taxes needs to be subsumed in GST.
SIAM has studied the draft GST
law in detail and has given detailed feedback for consideration of the
Government. Some of the transition
issues may have serious short term implications for the economy, if not
addressed now, though in the longer run the GST framework currently contemplated
will be best for the economy.