Mr S Sandilya,
President, SIAM welcomed the Union Budget 2012-13 tabled by Mr
Pranab Mukherjee, Hon’ble Finance Minister, said that under the current
difficult economic environment, the Finance Minister has tried to balance the
need for growth with fiscal compulsions.
While there are several
positive things, the auto industry had expected that the Finance Minister will
come out with specific timelines for introduction of Direct Tax Code (DTC) and
how petroleum subsidies would be addressed. Hon’ble
Finance Minister has not spelt out the road map for implementation of Goods
& Services Tax (GST) except for stating that the necessary constitutional
amendments will be taken up and the platform for implementation will be operationalized by August 2012 and the industry will keenly
look forward to its full implementation immediately thereafter.
While the auto industry
appreciates that there was a compulsion to increase base rates of service tax
and excise duty, the industry had hoped that the excise duty on large cars
would have come down from 22% to 16%
rather than going up. The 27% excise duty will increase tax
significantly for large premium cars.
The industry is
encouraged by 5 years extension of 200% weighted deduction of R&D
expenditure under Income Tax Act and also welcomes the introduction of weighted
deduction of 150% for expenditure on skills development. These measures will
help the industry improve its products and performance.
The increase in Customs
Duty on Cars and MUVs valued above USD 40,000/- from
60% to 75% seems to be a step to encourage local manufacturing, value addition
and employment. .
The other area which
industry had not expected was the increase in customs duty on non-alloy flat
rolled steel products which will influence price of steel and impact costs of
manufacturing in India.
Mr S Sandilya thanked
the Finance Minister for accepting the suggestion of SIAM regarding the common form for excise and
service tax and common return procedure. Also, the concessional
import duty on specified parts of hybrid vehicles has been extended to lithium
ion batteries and other parts of Hybrid vehicles. This will help the industry
to achieve better cost efficiency.
For more information,
Sugato Sen, Senior