Ahead of the Budget, the auto industry is understood to have asked the government to reduce excise duty and remove the additional Rs 15,000 tax imposed on big cars to minimise the gap with those of small cars.
Currently, the big cars attract excise duty of 22% plus an additional tax of Rs 15,000 for those with engines above 1,500 cc.
Vehicles which are longer than four metres and above 1,200 cc for petrol and 1,500 cc for diesel engines are classified as big cars. Those lesser than these specifications fall in the small car category, attracting 10% excise.
"Industry representatives in their meeting with the finance ministry officials had asked for removal of the additional Rs 15,000 tax on big cars and also reduce excise to at least bring down the gap with those on small cars," a source said.
It is also understood that the industry has asked the the government to retain existing excise levels on small car.
"The existing excise structure, specially the additional Rs 15,000 tax, on big cars is hurting some common models and this needs to be looked into," the source said.
Besides, the auto industry wants to retain the current customs duty structure on imported cars in order to protect the domestic industry as well as to encourage manufacturing cars in India. Fully imported cars attract over 100% customs duty.
The Society of Indian Automobile Manufacturers (SIAM) make pre-Budget representations to the government every year.
It is understood that the industry has already undertaken this exercise for this year too.
SIAM officials declined to comment on its demand from the government in this Budget.
The Indian auto industry has witnessed good growth this financial year. Total vehicle sold in the April-January period this fiscal stood at 1,26,76,247 units as against 99,37,850 units in the year-ago period, a growth of 27.56%.
Car sales during the period jumped 31.31% at 15,99,495 units against 12,18,060 units in the same period last fiscal.