NEW DELHI: Auto industry stalwarts on Wednesday raised the contentious issue of high taxes on automobiles as they took a sharp jibe at the Centre saying the government only makes strong statements but do nothing to reverse declining sales.
Maruti Suzuki India Chairman R C Bhargava said tax rates in India are more than double that of the EU, Japan and the US, making vehicle prices unaffordable for Indians with lower income levels. “GST is not the only thing. States have this one-time road tax, which takes the tax rate to 37-38% on cars. Do we need the kind of high taxes we have? I don’t think the automobile market is going to revive,” he said while speaking at industry body SIAM’’s 61st Annual Convention on Wednesday.
Venu Srinivasan, chairman and MD of TVS Motor Company, wondered whether the automotive sector is being recognised for its contribution to the economy and forex earnings. He highlighted that the GST on two-wheelers, the basic mode of transportation, is the same as a luxury-level product. “The price of the moped has gone up by 45-50% in the last few years. The switch to BS6, cost of ABS, Supreme Court ruling on mandatory purchase of three-year insurance, and a one-time tax have pushed prices of two-wheelers higher,” added Srinivasan.
Countering the complaints of higher GST, Revenue Secretary Tarun Bajaj asked the industry why car sales are not going up but demand for SUVs, which attracts additional cess, is. Bhargava said a few thousand rupees don’t matter for those who can afford SUVs.
GST on cars is primarily fixed at 28%. However, if the vehicle exceeds a certain body/engine size, there is an additional cess of up to 22%. Thus, most SUVs and sedans attract a total tax of as much as 50%. Two-wheelers, at large, attract a GST of 28% and players in this segment have been seeking a cut of 10% for the past two years. Higher fuel prices, too, are having a negative impact on the sector.