||Multiple rates of duty for motor vehicles
||There should be two excise duty rates for motor vehicles. We request that only two rates should be applicable on Motor Vehicles
a) Small cars/vehicles, Two-wheeler/Three wheeler/Goods vehicle/ chassis for motor vehicles/Passenger vehicle designed for carrying 10 or more persons should attract lower duty (12.5% as is the present rate)
b) All other passenger vehicles (20%)
|Government should rationalize tax structure on vehicles. It will be in alignment with the proposed GST Model, which proposes minimum tiers in tax structures amongst various goods.
||SUV Definition as per the notification No.12/2013 of Central Excise is vague has led to a distortion in the tax structure for same category of vehicles
||The definition should be reframed as provided below:
"Motor Vehicles falling under tariff heading 8703 and meeting all the four parameters mentioned below :
1) Engine capacity exceeding 1500 CC
2) Motor Vehicle length exceeding 4000 mm
3) Ground Clearance exceeding 200 mm
4) Transaction value exceeding Rs 12 lakhs per vehicle"
|The definition as published in notification No.12/2013 of Central Excise is as given below:
SUV Definition – "Motor vehicles of engine capacity exceeding 1500 cc, popularly known as Sports Utility Vehicles (SUVs) including utility vehicles. (Falling under HS Code 8703) Explanation - For the purposes of this entry, SUV includes a motor vehicle of length exceeding 4000 mm and having ground clearance of 170 mm and above."
The definition of SUVs on the basis of ground clearance of 170 mm and above is vague and arbitrary specially when Indian roads have high speed breakers and pot holes on roads due to which higher ground clearance of vehicles is desirable especially in rural areas. The definition with low ground clearance would create an anomaly in the market due to which companies may reduce their ground clearance in order to be in the lower excise duty category which will enable them to price their products lower for the price sensitive market of India. This will not be a desirable outcome.
The SUV tax when was introduced in Union Budget 2013-14 the concern as discussed by the then Finance Minister Mr P Chidambaram was that 90% of SUVs run on diesel and as diesel is a subsidized fuel the duty rise on these vehicles will help Government in recovering a part of the subsidy. Here, we would like to bring to your notice that diesel price has already been decontrolled and hence is now not a subsidized fuel anymore.
We therefore request that this additional 3% Excise Duty be reconsidered.
||Excise duty anomaly - Excise duty on motor vehicles having carrying capacity of 10 to 13 persons including the driver and falling under tariff heading 8702.
||10-13 seat vans are used as rural transport & not for private use at all. They are also used for mass transportation and serve the purpose of buses only. These vehicles should also attract excise duty of 12.5% as applicable to buses in tariff heading 87.02.
- Chapter Heading 8702 of CETA covers motor vehicles for transport of 10 or more persons, including the driver. Whereas Chapter Heading 8703 of CETA applies to motor cars and other motor vehicles principally designed for transport of persons (other than those of Heading 8702), including station wagons and racing cars.
- The Tariff Rate prescribed for Tariff Items 87021011; 87021012; 87021019 or 87029011; 87029012; and 87029019, i.e. passenger carrying vehicles with carrying capacity of 13 persons, including the driver or less, is 27.81%.
- Vehicles having seating capacity of 9+the driver and above mainly cater to transportation needs of rural population for whom having individual motor vehicle is an uneconomical and an unaffordable solution to satisfy transportation requirements. Buses with seating capacity of 13 passengers and above are treated as favourable class, while vehicles with passenger carrying capacity of 9 to 12 are treated adversely.
- The vehicles having carrying capacity over and above 10 persons, including the driver, but less than 14 persons, including the driver, are incorrectly equated with large luxurious sedans and sports utility vehicles normally used as personal vehicles, for taxation purposes.
- This artificial sub-clause created for vehicles having capacity up to 12 passengers + driver, and vehicles having capacity of 13 passengers + driver and above needs be discarded and the description of goods for the Chapter Heading 8702 of CETA should be aligned totally to the HSN Coding System.
||Incentivizing Replacement of Old Vehicles
||The Government should incentivise replacement of vehicles, which were registered before the year 2000 when the Bharat Stage 1 emission norms were introduced. The replacement of these vehicles would be beneficial for the society as it will reduce the emissions, including CO2, lead to fuel savings, reduce accidents, reduce health cost, etc. This would cover a total of 45 million vehicles (8 million cars, 3 million commercial vehicles, 2 million three wheelers and 32 million two wheelers) i.e. 40% of the vehicle population.
The incentives could be in the form of direct transfer of benefit amount to customers on scrapping old vehicle for a new one. To start with an amount of Rs 500 cr could be allocated in the 1st year for a pilot in select cities.
|Suggested scheme would not only spur demand but will also considerably reduce the pollution in the country as nearly 80% of pollution is caused by vehicles more than 10 years old. Several other countries most notably Spain and Italy have used this successfully to spur demand of automobiles in their respective countries. China has also carried out such an exercise. Recently Govt of Germany announced a Euro 2 bn package for replacement of old vehicles, which has also successfully stoked demand.
Detailed project concept paper has been submitted to the Ministry of Heavy Industries & Public Enterprises.
||Budget allocation to FAME (Faster adoption and manufacturing of Electric Vehicles)
||SIAM welcomes the announcements in this regard, which will go a long way in promoting xEV mobility. However, the initial allocation of 75 crores in this year’s budget is very modest for the project to take off in its entirety.
Needs funds to be made available from Auto Cess for the project to be launched in a meaningful way.
The concession also needs to be extended to a few other critical components of xEV as provided in the
|Excise Duty & Custom Duty Concessions on Identified parts of Hybrid/ EVs parts should be extended for a longer period so that the companies can plan accordingly.
||Budget allocation for public transportation
||SIAM suggests that budget allocation should be made for JNNURM scheme for a robust public transportation system in the country.
||Public transport system in India has been under developed in most cities. Government needs to keep allocating funds to STUS to procure buses. Moreover, Government has already announced its plans to develop smart cities. For any smart city model to be successful, it is utmost important to have a robust public transport system. Hence, budget allocation should be made to procure buses for STUs.
||Utilizing CENVAT for payment of NCCD on automobiles
||Board has even issued a draft circular no. F.No. 354/135/2012-TRU in Sep.2012 clarifying NCCD can be paid through cenvat credit of Basic Excise duty. It is requested that a final circular be issued in this regard so that pending litigation can be closed.
||NCCD is levied u/s 136 of Finance Act, 2001 and this duty is levied by way of duties of excise. The taxable event of this duty is similar to Central Excise Duty.
Rule 3(4) of Cenvat Credit Rules allows that the cenvat credit may be utilized for payment of any duty of excise on any final product. The exception is given in Rule 3(4) that cenvat credit of BED cannot be utilized for payment of NCCD on goods falling under tariff items 8517 12 10 and 8517 12 90 (i.e mobile phones).
Rule 3(7) does not impose any restriction for utilization of Cenvat credit of BED for payment of NCCD.
Thus, there is no restriction for utilizing cenvat credit of BED for payment of NCCD levied on motor vehicles.
However, the department is issuing periodical show cause notices demanding that NCCD should be paid in cash only. This is revenue neutral for the Government in as much as the cenvat credit of BED can then be utilized for payment of basic excise duty.
||Legislative Amendment to Central Excise Act- Excise Duty should not be applicable on Sales Tax/ VAT Benefits given by State Governments
||It is suggested for a legislative amendment to Excise Law with the following substance:-
The amount of sales tax collected and retained by the manufacturer, as allowed under an incentive scheme launched by the State Government, be considered as equivalent to sales tax actually paid under the excise law and thus should not be added to the assessable value of goods for excise duty calculation. This should be made effective from date of amendment.
|Detailed note explaining the issue is provided in Appendix 2.
||Interest on delay in payment of Service Tax.
||Rate of Interest ranging from 18% to 30% introduced in service tax laws (Notification No.12/2014-Service Tax dt. 11.07.2014
||Interest rate as high as 30% for delay in payment of service tax is unjustifiable. Even in State VAT laws, rate of interest is 18%. Hence, same should be withdrawn.
||Accumulation of Special Additional Duty
||Small Vendors facing cash strain as they are unable to utilize the excess Special Additional Duty due to low value addition
Higher Import content and lower value addition
|Excess Accumulation of SAD is not sector specific and is an all Industry Issue.
Government to remove SAD which would pave way for alignment with GST, more so when Govt has taken the initial steps towards implementation of GST.
||Definition of input services amended and restricted as below:
- Removal of the expression “activities related to business” from the definition
- Specific services included (list not exhaustive)
- Services having nexus to manufacture would only qualify as input services.
- Credit on services excluded would result in cascading effect of taxes on the final product.
- Clarity on credit eligibility of services which do not form a part of the eligible list/ ineligible list.
- Admissibility of credit on services – narrowed.
- Restore the phrase "activities related to business" in the definition of input services.
- Admissibility of Cenvat credit – to be broadened to include all services related to business.
- Credit on Services relating to employees to be allowed
||CENVAT credit on Capital goods ("CG")
||As per the existing rule 3 of CCR, credit on CG is availed 50% in the first year and balance in the subsequent years.
||Parity to be maintained with that of Inputs.
Entire credit may be allowed in the first year of purchase itself.
Move in line with introduction of GST
||Rationalization of Provisions of Section 32AC
||Investment Allowance for new Plant & Machinery (under Section 32 AC) should be allowed if new Plant & Machinery has been acquired and installed during the period beginning from 01.04.2013 and ending on 31.03.2017.
||Finance Act 2013 has inserted the provisions of Section 32AC. This section enables the assesse to claim an Investment allowance @ 15% for new plant and Machinery acquired and installed during the period 01.04.2013 to 31.03.2015 if such investment is more than 100 Crores.
Finance Act 2013 has inserted the provisions of Section 32AC. This section enables the assesse to claim an Investment allowance @ 15% for new plant and Machinery acquired and installed during the period 01.04.2013 to 31.03.2015 if such investment is more than 100 Crores.
The section was further amended to cover cases where the assessee has acquired and installed new assets between 01.04.2015 to 31.03.2018 if such investment is more than 25 Crores in the respective FY.
There are lot of projects / expansion of the business which may be spread over the respective year. It may be possible that a company acquires certain assets in a year but it may complete the installation in another year.
Thus, although the assessee has invested in the new plant and machinery he may not be eligible to claim the allowance due to the reason that the same is acquired in one year but is installed in another year.
Therefore it may be further rationalized / clarified stating that while the eligibility for the benefit under this section will be based on the investment in that FY, the allowance will be given in the FY in which the asset is put to use.
||Any interest, commission, brokerage, fees for technical services paid or payable to a resident on which tax has been deducted in subsequent year or has been deducted during the previous year but paid after due date u/s 139(1), deduction shall be allowed to assessee @ 30% in computing the income of the previous year in which such tax been paid.
||To reduce the hardship on the assessee, finance minister proposed to restrict the disallowance u/s 40(a)(ia) to 30% on payment made to residents on which tax was deducted in subsequent year or was not paid before due date for filing return u/s 139(1). Conversely, Income Tax Act states that allowance should be restricted to 30% in the year in which tax is paid contradicting to the proposal in Union Budget.
||Deduction allowed u/s 40(a)(ia) is not in accordance with the Union budget memorandum 2014. Request for suitable amendment in the provisions to provide clarity meeting the intent of budget proposal.