Automobile industry's apex body, the Society of Indian Automobile Manufacturers (Siam), has sought a standard tax rate for small cars and multi-utility vehicles (MUVs) in the GST while pressing for an additional 8% tax on other cars.
Siam has also suggested a minimum relaxation for 8% in taxes on electric/hybrid or alternative fuel cars. The body has also requested a standard rate on two wheelers, three wheelers and commercial vehicles.
"While for a long time there were only two rates of excise duties on passenger cars, in recent years, the bigger car rates have got fragmented and today we have four rates for passenger cars excluding electric vehicles and hybrid electric for which lower rates are applicable. In view of the current scenario, there is a need to look at GST rate for automobiles sensitively," Siam said in a statement.
Currently, a small car attracts 12.5% excise duty. This segment should have a length of less than four metres and an engine capacity of less than 1,200 cc for petrol or less than 1,500 cc if a diesel car. Maruti's Alto and WagonR and Hyundai's i10 are small cars. Interestingly, two-wheelers, three-wheelers, trucks and buses enjoy the same excise duty.
At the next segment of vehicles, excise rate almost doubled to 24%. This segment is defined by a length of over four metre but an engine capacity similar to small car. Toyota's Etios and Honda City fall under this segment. The next slab of 27% excise duty is imposed on vehicles over four metre and with a petrol engine of over 1,200 cc or diesel engine of over 1,500cc. Cars like Honda Accord Maruti Ciaz (petrol) fall in this segment. The highest excise of 30% is imposed on SUVs and MUVs. These must have a length of over four metre, engine of over 1,200 cc for petrol or over 1,500 cc for diesel and a ground clearance of over 170 mm. The GST regime is expected to subsume all taxes that are now levied at the Centre (excise duty) and state levels (sales, road and registration tax).