The Indian automotive industry is really a tough nut to crack. While certain products are priced more than double thanks to an insanely high excise duty, ugly looking compact cars get a ridiculous tax exemption for being less than 4m in length.
According to Economic Times, Jnaneshwar Sen, Senior Vice President Marketing and Sales, vented out his displeasure of taxation system on cars in India by comparing them with (taxes on) cigarettes! He said that it is really unfortunate that cigarettes, which are harmful for consumption are taxed lower than Cars which are almost a necessity in India. Indian auto sector is bleeding because of tragically high excise duty, CST, calamity tax, education cess, VAT, road tax and what not! All of these add up to a lot and significantly raises the actual cost of vehicle.
Sen also said that the lack of a uniform taxation policy across India is also a major confusing hurdle. Certain states have 12.5 per cent VAT while some have a 14.5 per cent VAT. Road tax presents an even more more annoying scenario. While in some states it is as low as 4 per cent, in some it is as high as 16 per cent. Customers many a times feel cheated for paying more taxes for their car in certain places while their friends or relatives have bought the same car at a significantly cheaper amount thanks to a more lenient taxation policy at their place.
Sen also pointed out to the government’s lack of clarity on subsidy given to diesel fuel which is keeping manufacturers undecided on whether to invest in diesel or not. The excise duty cut announced by the Central Government in the interim budget also failed to give the necessary boost to the sector.
Nonetheless, what this highlights the grudge and the pressure auto manufacturers are reeling under. Hopefully, the new government, whichever it may be, takes these issues seriously and works towards the betterment of the auto industry.