Finance Minister may amend proposal to raise excise duty
If you are planning to buy a sports utility vehicle (SUV), it might be advantageous to wait for a few days.
The Government may modify its proposal to increase the tax on such vehicles, introduced in the Budget for 2013-14. The automobile industry had lobbied strongly against the move. Even the Heavy Industry Ministry had pitched in, suggesting that a threshold limit be introduced, so that budget utility vehicles are not taxed at the same rate as luxury SUVs.
The Budget had raised the excise duty on SUVs from 27 per cent to 30 per cent, while exempting those registered as taxis.
“When the Finance Minister gives a reply on the Finance Bill, he is likely to amend this proposal. It could be giving a threshold for value,” a highly placed Government source told Business Line. The reply will be made in Parliament when it reassembles after recess on April 22.
Threshold of value means a model priced below a certain level will not attract the additional three per cent duty. Here, the price is manufactured value mentioned as assessable value.
Although the source refused to give more details on the amendment, the Heavy Industries Ministry had suggested a threshold of Rs 10 lakh. Bringing such a threshold may benefit SUVs such as Mahindra Scorpio, Mahindra Bolero, Tata Sumo and Tata Safari.
Any change in the proposal will benefit not only the consumer, but also give relief to the auto industry which is reeling under lower sales.
Last month, in a letter to Finance Minister P. Chidambaram, Heavy Industries Minister Praful Patel wrote, “If imposing this additional duty is entirely unavoidable on account of revenue and the subsidised price of diesel, may I request you to exempt all such vehicles classified as SUV that have an assessable value of up to Rs 10 lakh from the ambit of three per cent additional excise duty,” he said.
The present notification issued by the Finance Ministry envisages coverage of vehicles of above 4 metres length, 1,500 cc and above engine capacity, and 170 mm and above ground clearance for the levy of additional three per cent excise duty.
“With this criteria, it is unfortunate that commonly used vehicles in rural and semi-urban areas such as Bolero, Sumo, Tavera, Trax and many others have come under this additional duty. Needless to say that neither are these vehicles high-end nor luxurious,” Patel said.
The letter also mentioned that they are a necessity and a compulsion for vehicle owners given the poor rural road network and their lower price band.
Moreover, these vehicles have a higher ground clearance.
The Minister also felt that there is no specific definition of SUV either across the world or in India. Even the Motor Vehicles Act or the Central Vehicles rules do not have such a classification.