Budget 2019: Auto Industry Demands Budget Committee To Bring Down GST Rates

The Indian auto industry has been witnessing a slowdown for quite sometime now and automakers are asking for government’s support to make things better. The Society Of Indian Automobile Manufacturers (SIAM) has already asked the government to reduce GST rates on all passenger vehicles measuring above four-metres and bring them under the 18 per cent bracket from 28 per cent in a bid to reduce their final cost. Several industry bodies like FADA and ACMA have also joined the fray and have put forth their demand ahead of the upcoming budget session.

In line with SIAM’s expectations, Vinnie Mehta, Director General, ACMA said, “The automotive industry is witnessing one of the most challenging times ever. Domestic consumption of all vehicle segments is witnessing negative growth. The auto component industry, being an intermediary, has recommended for a uniform GST rate of 18 per cent on all auto components. The industry has significant aftermarket operations, which is plagued by grey operations and counterfeits due to the high 28 per cent GST rate. As we know that entire auto industry is undergoing major transition with implementation of BSVI and newer safety norms. That apart, the government is keen to usher in electric mobility. Enhancing spend on R&D and creating infrastructure for innovation are therefore need of the hour for the industry to stay relevant. Facilitating new product development through a technology development and acquisition fund, as also enhancing the rate of weighted deduction on R&D spend will be steps in the right direction by the government.”

Auto Component Manufacturer’s Association (ACMA) has further demanded to reduce the basic custom duty on raw material such as steel and aluminium which attract 15 per cent and 10 per cent, respectively. The industry body being a voice of Indian auto component makers has also demanded a new definition for Micro, Small and Medium Enterprises (MSMEs) which recommends to charge the corporate tax on money invested on plant and machineries instead of their annual turnover. Moreover, it has also asked the government to reintroduce investment allowance at 15 per cent for manufacturing companies that invest more than ₹ 25 crore in plant and machinery.

Federations of Automobiles Dealers Associations (FADA) has also chalked out a list of demands for the government. Along with demanding reduction in GST rates, it has asked government to include auto retailers (including workshops) in the MSMED Act 2006 and consider them as one industry. FADA has also requested to reduce the Corporate Tax for Proprietary & Partnership firms in similar lines to what the Government has done for new small Pvt. Ltd. Companies with a turnover of up to ₹ 250 crores. In addition to these demands, the association has also asked to eliminate debit and credit card charges for auto dealers on transactions above ₹ 5000, exemption of Auto Dealers on Tax Collected at Source (TCS) in the course, to reduce GST rates to 5 per cent on margins of all pre-owned vehicles, ease of liquidity to Non-Banking Financial Companies (NBFCs) for easy flow of trade and attractive incentives for successful vehicle scrappage policies.

Source: Read Full Article