Amid concerns of higher cess derailing the current growth of auto sales as domestic passenger vehicle dispatches increased 15.12 per cent to 2,98,997 units in July from 2,59,720 units in the same month last year, an anxious automobile industry has asked the government to avoid any further tax burden.
The Finance Ministry has proposed 25 per cent cess on over-4 metre cars and SUVs from the current 15 per cent in Goods and Sales Tax (GST) that could increase prices by up to Rs 15 lakh on top-end luxury vehicles.
Addressing the concerns of the industry, Vishnu Mathur director general of Society of Indian Automobile Manufacturers' (SIAM) said the shocker of cess looms large on the industry with global automakers threatening to stop investment into India. "We already have three tax structures for the passenger vehicles segment, and an increase for bigger cars and SUV's will distort the market and defeat the larger gains of GST," Mathur said.
After the GST came into force from July 1, auto companies had cut prices of cars and SUVs to pass on the benefits of lower taxes to customers. Now they fear higher cess will force them to increase prices and that could derail sales.
Other segments like motorcycle rose 16.9 per cent to 10,48,657 units last month compared to 8,97,084 units a year earlier. Total two-wheeler sales in July stood at 14 per cent higher to 16.79 lakh units.
Commercial vehicle sales grew 13.78 per cent to 59,000 units in July, while the three-wheeler market declined 11 per cent to 41,261 units.
For the fiscal, sale of passenger vehicles grew by 7.29 per cent (April-July 2017) over the same period last year and overall commercial vehicles declined 3.67 per cent compared to the same period last year.
The three wheelers sales too declined 21.33 percent in April-July 2017 over the same period last year.
Two-wheelers sales registered a growth at 9.24 percent in April-July 2017 over April-July 2016. Within the segment, scooters and motorcycles grew by 18.16 per cent and 6.58 per cent respectively, while mopeds declined 13.04 per cent over April-July 2016.