The Budget 2018 that has been closely followed by all the auto makers in the country and considering that this is the last budget the current government was to pronounce ahead of the elections next year, the auto industry was hoping for a bunch of changes in the current GST framework. We’ve already provided you with all the expectations the industry had from the Budget 2018 but it looks like the there will be no changes whatsoever to the current structure.
Luxury car makers were very keen on seeing the current GST rates come down. Currently GST tax rates stand at 48 per cent for sedans and 50 percent for SUVs in the premium segment which are high. The auto industry ad urged the government to not only reduce these taxes to reasonable levels, include left out taxes such as road tax etc. within the GST regime, but also ensure stabilization for longer term policies and tax regimes.
However, these issues weren’t tabled at all. In fact the Finance Minister, Arun Jaitley said, “There is substantial potential for domestic value addition in certain sectors, like food processing, electronics, auto components, footwear and furniture. To further incentivise the domestic value addition and Make in India in some such sectors, I propose to increase customs duty on certain items.”
This, of course, means that there will be an increase in the custom duty on auto components but according to the government will certainly help the Make-In-India campaign.
What was also expected was a reduction in the GST rates of electric vehiclesand this was to incentivise the faster adoption of electric mobility in India. The Society of Manufacturers of Electric Vehicles (SMEV) had urged a cut of 5 per cent of the GST rate on all electric vehicles and electric vehicle subsystems for the Budget 2018. But, sadly, there was no mention of EVs or the infrastructure development for EVs.
The auto industry then sees no respite from the current GST and cess rates and certainly will be disappointed as it had high hopes from the Budget 2018