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  3. Govt may extend excise duty concessions to auto sector beyond December

Govt may extend excise duty concessions to auto sector beyond December

12 Sep 2014 Evaluate

In a move which would provide further relief to the auto-makers, the government is mulling at the proposal for extending excise duty concessions to the automobile sector beyond December. Further, towards this development, the Heavy Industry Ministry is likely to send a proposal to Finance Ministry regarding extension of excise duty concession till March 31, 2015.

The extension of duty concession would enable continuation of excise duty on small cars, scooters, motorcycles and commercial vehicles at the current level of 8% from 12% previously and would enable factory gate duty on SUVs at the reduced rate of 24% as against 30%. Meanwhile, the duty on large cars will continue at 24% compared with 27% earlier, while the duty on mid-sized cars will stand at 20% from 24%.

The government to help the industry tide over sluggish sales had cut excise duty on cars, SUVs and two-wheelers as well as consumer durables in the Interim Budget in February. While, in the cheer for automobile and consumer durable sectors, the government in June this year extended the excise duty concessions which were earlier valid till June 30 by six months to December 31. However, it then also announced that capital goods and consumer durables will continue to attract a lower duty of 10% as against the pre-budget rate of 12%.

Most carmakers had passed on the benefit of excise duty reduction to customers by cutting prices on account of sluggish sales of the industry, which were already impacted by soaring prices of fuel. Automobile sales in India fell for the second consecutive year in 2013-14 and were 4.65% lower at 1786,899 units. In 2012-13, car sales fell 6.69%, the first drop in a decade.

In a separate development, Heavy Industries Ministry is contemplating over a policy of mandatory recalls, which will do away with the current system of voluntary recalls by auto companies.

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