Asking the government not to club automobiles with 'health hazards' like cigarettes and pan masala while framing GST rate, SIAM today said standard rates must apply on small cars, two-wheelers, three-wheelers and commercial vehicles, while bigger cars should attract 8 per cent more than the standard rate.
While seeking to do away of the current multiple tax slabs in the auto industry, Society of Indian Automobile Manufacturers (SIAM) also said for electric vehicles, hybrid vehicles and other alternative fuel vehicles, the rate must be at least 8 percent less than the standard rate.
"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 today we have four rates for passenger cars excluding electric vehicles and hybrid electric for which lower rates are applicable. In view of the current scenario, there is a need to look at GST rate for automobiles sensitively," SIAM said in a statement.
There should be only two rates for conventional vehicles. Standard GST rate should be applicable on small cars, MUVs, two-wheelers, three-wheelers and commercial vehicles. Cars other than small cars should attract a GST rate which is 8 percent more than the standard rate, it added.
It further said there must "also a lower GST rate for electric vehicles, hybrid electric vehicles and other alternative fuel vehicles, which should be at least 8 percent less than the standard rate."
Stating that the Automobile industry operates 'at the frontier of technology' improving the overall level of technology of a nation leading to better job opportunities, SIAM said its "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.
Commenting implications of GST on incentives given to companies to set up units, SIAM said many of its members have made huge investments in locations falling under Area Based Exemption scheme in places like Uttarakhand and Himachal and 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, 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," it said. Stating that it has given a detailed feedback for consideration of the government, SIAM said, "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."
SIAM said 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", adding 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 the 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, it added.
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