FADA Pitches for Excise Duty of 16% on Passenger Cars at Par with Other Vehicles

FADA has, in a Memorandum of Suggestions for the Union Budget 2005 and on issues relating to Motor Vehicles Act/Central Motor Vehicle Rules, submitted to various authorities in the Government, asked for excise duty of 16% on passenger cars at par with that other motor vehicles. Major recommendations contained in the Memorandum are outlined below:

Excise Duty

▪	All categories of vehicles should attract the same rate of excise duty at 16%. Accordingly, excise duty on passenger cars should also be rationalised at the identified Cenvat rate of 16%.

 
Customs Duty

▪	Tariff concessions for Alternate Energy Driven Vehicles (AEDVs) in the interest of clean environment and oil security.

 
Income Tax

1.	Depreciation allowance on passenger cars be increased to 33 ½%, as the product cycle is becoming shorter and the used vehicle prices have crashed;
2.	Depreciation allowance on commercial vehicle purchased for replacement of + 15-year old vehicles be increased to 60% to incentivise renewal of transport fleet and to sustain the tempo of growth.

 
Infrastructure

1.	A thrnst be given to the development of urban and intra-¬city roads and adequate parking facilities within the cities; accordingly, construction and operation of multi-layered parking lots in metropolitan cities should qualify as Infrastructure Project and be accorded the benefit of sections 80IA and 10(23G) of the Income Tax Act.
2.	Duty free import of automated car parking systems, which will help encourage retrofitment of such systems in the existing commercial and residential buildings, resulting in optimum use of scarce space in the cities.

 
VAT

1.	Uniform VAT at the State level, with a provision for set¬off of all taxes including the tax charged by the exporting State on inter-state movement of goods.
2.	Doing away with all other local taxes.
3.	A clear-cut transit mechanism for carry forward of tax already suffered on closing stock before changeover to VAT regime.
4.	Pegging VAT on sale of pre-owned cars at Rs. 1,000.

 
Suggestions relating to Motor Vehicles Act/Central Motor Vehicle Rules

1.	Registration of non-transport vehicles be delegated to the Automobile Dealers and the requirement of taking vehicles to RTOs for inspection before registration be dispensed with, as all vehicles are tested and certified for emission and roadworthiness.
2.	Uniformity may be brought in road tax, which varies substantially from State to State leading to undue diversion of trade from one State to another, and it should be pegged at maximum of 1.5% of dealer invoice value.
3.	A Vehicle Life Terminal Policy be framed.
4.	To promote clean air and road safety, all vehicles including non-transport vehicles, be subjected to periodic inspection and certification, and non-Government agencies, including Automobile Dealers, having the requisite technical capability be authorised to carry out such inspection and certification of vehicles.