The Society of Indian Automobile Manufacturers (SIAM), the Indian automotive industry's largest body, wants the government to reduce the excise duty on large cars and SUVs from the existing 30% to 20% in the upcoming Union Budget for 2016-17. In addition, SIAM has also asked the government to merge multiple taxes into a single excise duty, stating that the automotive industry in India is "highly taxed" with levies accounting for up to 77 per cent on cost.
Vishnu Mathur, Director General, SIAM, told the press, "We have asked for 20 per cent excise duty on vehicles that currently have excise duties of 24, 27 and 30 per cent."
"From 12.5 to 30 per cent, the differential in excise duty has grown over the years. We are asking for two rates -- one for small cars and one for large vehicles," Mathur further explained.
At present, small cars less than four meters in length attract an excise duty of 12.5 percent, while cars longer than four meters in length but with engines of less than 1,500cc capacity attract a duty of 24 per cent. Vehicles with engine capacity of more than 1,500cc are charged an excise duty of 27 percent while those with ground clearance of more than 170mm attract an excise duty of 30 percent.
The other demand that SIAM is laying before the government is an incentive scheme for scrapping old vehicles. If implemented successfully, Mathur believes that it will help reduce air pollution.
"We want this vehicle scrapping scheme to be incentive based and not a mandatory one. Even if 15-20 per cent old vehicles go off the road, it will make a huge difference. Besides, the scheme would be revenue positive for the government," he said.
SIAM said the total incentive required for scrapping 15-year-old vehicles, including two-wheelers, three-wheelers, passenger vehicles and commercial vehicles, could be around Rs 56,665 crore and each new vehicle purchased against a scrapped vehicle will generate more tax revenue.
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