SIAM Proposing Radical Changes In GST

The Society of Indian Automobiles Manufacturers (SIAM) has proposed a bunch of alterations in the Goods and Services Tax (GST) applicable on automobiles and expects them to be passed in the upcoming Union Budget 2018-19. Here’s the list of changes that SIAM has put forward:

• Only two tax rates under GST for automobiles in place of multiple tax brackets
• A special tax rate of 12 per cent for hydrogen fuel cell-powered vehicles. All-electric vehicles falls in the same bracket
• For used cars, a fixed GST rate of 5 per cent on the differential value between sale and purchase price of the used car
• For electric vehicles, an extension of customer duty concessions for additional critical components
• Denial of any custom duty concessions to CBUs (completely built units) of electric vehicles to further encourage manufacturers in favour of make-in-India programme
• Exempt 10-13 seater ambulances from levy of compensation cess

Apart from these, SIAM has also sought the government’s help to clearly describe what CKD (completely knocked down) units and SKD (semi knocked down) units of electric vehicles are.

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As of now, the GST regime for automobiles looks like this:

The GST was implemented earlier this year and and went through some tax slabs and cess revisions later on. Although hybrid cars, which are unanimously considered as the perfect product to transition from internal combustion technology to all-electric, are still taxed at 43 per cent. That's less net tax overall compared to SUVs, mid-size and luxury cars. What is appalling though is despite their fewer emissions, hybrids are taxed 14 per cent higher than petrol and diesel powered cars. And since the none of the hybrid vehicles are produced locally and are brought in from overseas, the higher import tax takes their asking price to a different planet.

We believe that a substantial subsidy (on import duty or GST) needs to be given to such vehicles. The eventual lower price will not only encourage customers to opt for these eco-friendly vehicles, but also enable more automakers to get their hybrid products in India as well. More importantly, the reduced emission levels from hybrids will help the country fight the losing battle of dangerously high levels of air pollution, espeically in our congested metros.

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