KOCHI: The state government’s proposal to increase the motor-vehicle tax and impose an additional cess on fuel will harm the automobile industry, which was on a recovery path after the pandemic-induced slowdown, say industry players. The one-time tax is expected to generate an additional Rs 432 crore in revenue.
“The one-time tax of 1-2% may not greatly impact the customer, who will end up paying an additional Rs 20,000 over 15 years. But Rs 2/litre social security cess on fuel will definitely affect the industry. There are chances that those proposing to purchase a vehicle will postpone their plans. This will eventually affect the automobile sector,” said Somy K Cheruvathoor, VP, of marketing, at Popular Vehicles and Service.
The tax on four-wheelers priced up to Rs 5 lakh is 1%. Vehicles costing up to Rs 15 lakh have been hit with an additional tax of 2%. Those costing over Rs 15 lakh will be slapped with an additional 1% tax increase over the current structure.
The one-time cess levied on newly registered motor vehicles under Section 10 of the Kerala Road Safety Act, 2007, has also been increased. It has been raised from Rs 50 to Rs 100 for two-wheelers, Rs 100 to Rs 200 for light motor vehicles (LMVs), Rs 150 to Rs 300 for medium motor vehicles (MMVs), and Rs 250 to Rs 500 for heavy motor vehicles (HMVs). This is expected to generate an additional Rs 7 crore in revenue.
“The budget is focused on revenue mobilisation. There is no doubt that the increased tax structure and fuel price would have an impact on the general public. The budget should have included some proposals to support the public transport system,” said Dhanu Raj, director of CPPR, a think tank based in Kochi.
However, the proposal to reduce the one-time tax for electric motorcars and electric tourist motorcars to 5% has been welcomed.
“This is the only people-friendly move announced in the budget. We hope that the number of electric vehicle sales in the state will go up in the coming days. But in order to make it a success, the government should set up sufficient charging stations,” an industry executive said on condition of anonymity.
Meanwhile, the Kerala Bus Operators Federation believes the proposal to reduce taxes by up to 10% for carriage and stage carriage vehicles is a sham. “The new proposal will lower our quarterly tax bill by Rs 2,500. But what about the fuel price hike? We will have to pay an extra Rs 6,000 every month on average to cover the increased fuel costs. The budget is just an eyewash,” said K B Suneer, state joint secretary of the federation.