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Chidambaram hints at cut in excise duty on small cars

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TEAM AUTO: The Finance Minister, Mr P. Chidambaram, with (from left) Mr Jagdish Khattar, President SIAM, and MD, MUL; Mr Brijmohan Munjal, Chairman, Hero Honda; Mr Pawan Munjal, MD, Hero Honda; Mr Rahul Bajaj, Chairman, Bajaj Auto; and Mr Venu Srinivasan, CMD, TVS Motors, at the AGM of SIAM in the Capital on Thursday. Kamal Narang
TEAM AUTO: The Finance Minister, Mr P. Chidambaram, with (from left) Mr Jagdish Khattar, President SIAM, and MD, MUL; Mr Brijmohan Munjal, Chairman, Hero Honda; Mr Pawan Munjal, MD, Hero Honda; Mr Rahul Bajaj, Chairman, Bajaj Auto; and Mr Venu Srinivasan, CMD, TVS Motors, at the AGM of SIAM in the Capital on Thursday. Kamal Narang

Our Bureau

New Delhi, Sept. 1

THE Finance Minister, Mr P. Chidambaram, on Thursday hinted at a possible paring of taxes levied on small cars, in a bid to attract foreign investment to the automobile industry. "The Government is fully aware that companies intending to manufacture small cars are looking at India as a base for such manufacturing. We have to revisit the issue of taxation earlier than we thought," Mr Chidambaram said, while addressing auto industry representatives at the SIAM Annual Convention.

Automobiles come under the highest excise duty slab of 24 per cent. The sector also attracts a one per cent cess for natural calamity, a two per cent education cess and a 12.5 per cent auto cess.

Sharing the concerns of the auto industry over a high tax rate, Mr Chidambaram said: "I am aware that cars are classified as luxurious items such as liquor and tobacco. We have to revisit the rate of taxation to keep pace with the developments in the auto industry."

Responding to the Society of Indian Automobile Manufacturers' (SIAM) demand, Mr Chidambaram said the Government would also consider phasing out of old buses and trucks.

The Minister assured the industry that he would look into their demand of coming out with a policy for phasing out old commercial vehicles.

He, however, ruled out a nationwide goods and services tax in the near future to substitute the excise, service tax and VAT regime.

(This article was published in the Business Line print edition dated September 2, 2005)
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