Audi, Merc call for tax reforms, duty reduction in Budget

A reduction in excise duty on cars and SUVs is among the key recommendations made by German luxury carmaker Audi for the upcoming Union Budget 2016-17.

Furthermore, the carmaker also suggested the implementation of the Goods and Services Tax (GST) as a means to eliminate the complex tax structure that is currently in place.

“The simplification of tax structure will be a big step forward, as currently differential pricing and taxes across states make it very complicated. Therefore introduction of GST will go a long way in helping in ease of business,” stated Joe King, head, Audi India in a statement.

In fact, automobile industry body Society of Indian Automobile Manufacturers has asked the government to reduce excise duty on large cars and SUVs to 20 percent from the current duty of up to 30 percent in the upcoming Budget, according to reports.

At present, small cars less than four metres in length attract excise duty of 12.5 percent, while cars with more than four metres length but having engine capacity of less than 1,500cc attract a duty of 24 percent. Also, vehicles with engine capacity of more than 1,500cc are charged an excise duty of 27 percent, while those with ground clearance of more than 170mm are charged an excise duty of 30 percent.

Moreover, Roland Folger, president and CEO of Mercedes-Benz India, expressed concern on the high customs duty being imposed on cars being brought in as CBU (Completely Built Unit) in India.

“There is a customs duty of over 180 percent at present on imported cars in India. It could have been much easier to introduce a higher level of safety, comfort and security systems, thanks to our technological advancements in those fields. However, the rest of the world gets to keep the new technology,” Folger told Autocar India.

“For instance, the Mercedes-Benz S 400 L Hybrid in Malaysia received full duty exemptions in 2014, and as a result the price went down from nearly 880,000 Malaysian Ringgit to 580,000 Malaysian Ringgit. People were shocked to know how much tax was levied on automobiles,” Folger, the former CEO of Mercedes-Benz Malaysia added.