SIAM Suggests GST Rates For Automobiles To Govt

The automotive industry is among the worst hit when it comes to taxes (though that is a topic in itself). Hence, it is only logical that this industry would look forward to GST. GST or goods and services tax is being hailed as a means to bring in a clean, transparent and predictable tax regime. This would help in not just streamlining sourcing and logistics, but in bringing down manufacturing costs as well. This is the need of the hour as the industry moves to higher emission and safety standards while offering higher fuel economy through Corporate Average Fuel Economy or CAFE standards.

The Society of Indian Automobile Manufacturers (SIAM) represents the automotive industry in India and it has joined hands with the Indian government. Due to this collaboration, the auto industry will jump from BS-IV to BS-VI emission standards by 2020. New safety features will also be added to the vehicles. Both these developments are bound to have huge cost implications for OEMs, and so the need for GST.

SIAM has suggested that GST rates for automobiles should be looked at more sensitively. Why? For a long time, there were only two excise duty rates for passenger cars. However, today, we have four rates which come after we exclude the rates for electric and hybrid electric vehicles. So, the body has suggested the following:

1. Standard GST rate should be applicable on small cars, MUVs, two-wheelers, three-wheelers and commercial vehicles.
2. Cars other than small ones should attract a GST rate that's 8 per cent more than the standard rate.
3. A lower GST rate for electric vehicles, hybrid electric vehicles and other alternative fuel vehicles, which should be at least 8 per cent less than the standard rate.

SIAM said that many members have invested in locations under the Area-Based Exemption Scheme and their want their benefits need to be protected under GST regime until the scheme ends. These locations fall in states like Uttarakhand and Himachal Pradesh. SIAM also fells that road tax and registration tax need to fall under GST, since, they burden the end user if they remain outside the GST's framework.