The country's auto industry body SIAM want only two Goods and Services Tax (GST) rates for passenger vehicles in the upcoming union budget.
"The automotive industry has been suggesting two rates for cars in place of multiple tax rates, and requests the government to keep only two rates for vehicles under the GST regime," Society of Indian Automobile Manufacturers (SIAM) said in its suggestions for the Union Budget 2018-19.
The industry body further suggested for a special tax rate of 12 percent for electric and hydrogen fuel cell powered vehicles, news agency PTI reported.
Currently, under the GST regime, multiple rates are levied depending on the different categories of passenger vehicles. Small petrol cars with engine capacity less than 1200cc attract 1 percent cess, while diesel cars with engine capacity of less than 1500cc attract 3 percent cess, on top of the 28 percent GST.
The cess on hybrid cars, including mid, large and SUVs, currently attracts 15 percent, Also vehicles used for transport of not more than 13 passengers attracts 15 percent cess.
The industry has also suggested the government to tax used vehicles at 5 percent GST on the differential value between sale and purchase price of the used car, PTI reported.
SIAM has further requested the finance ministry to exempt 10-13 seater ambulances from compensation cess.
The industry has sought extension of custom duty concessions for additional critical components. Besides, it has sought for denial of any custom duty concessions to CBUs (completely built units) of electric vehicles to support 'Make in India' programme, reported the news agency.
Another concern for the auto industry is, the manufacturer is unable to file claims since July and pending sum has crossed over Rs 1,000 crore.
Industry experts said that under GST system of making payments upfront and claiming input tax credit refund is not functioning properly. The working capital requirement for companies has increased and they could rethink on exports till the issues stay unresolved, according to an Economic Times report.