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Rediff.com  » Business » Withdraw proposed SUV tax to save industry: Praful Patel

Withdraw proposed SUV tax to save industry: Praful Patel

April 14, 2013 16:38 IST

Expressing concern over the "dramatic" slump in the domestic auto sector, Heavy Industries Minister Praful Patel has pitched for reconsidering the proposed tax on SUVs to help bring in demand."We are looking at the issue about SUV tax as the auto industry has seen a very dramatic slump in this year as compared to past few years," Patel said on the sidelines of a conference over the weekend here.

Patel favoured vehicles priced below Rs 10 lakh (Rs 1 million) being exempted from the special utility vehicle (SUV) tax announced in the Budget. The auto industry too is demanding withdrawal of 3 per cent excise duty hike on SUVs  introduced in Budget.

The call for review comes in wake of drop in auto sales in the last fiscal. Car sales fell 6.7 per cent to 18,95,471 units, the first contraction in a decade. In the previous fiscal, car sales for the first time crossed 2 million mark at 2,031,306 units.

According to the industry lobby Siam projections, passenger car segment is pegged to grow by 3-5 per cent, while the UV segment is likely to grow 11-13 per cent ."Overall, passenger vehicle sales are estimated to rise by 5-7 per cent in this financial year," Siam said.

Supporting the automobile industry's demand for having a re-look at the excise duty increase to 30 per cent from 27 per cent earlier on SUVs, he said, "I have spoken to Finance Minister P Chidambaram and made a pitch that this should be considered as there is no classification of SUVs under the Motor Vehicles Act," Patel said.

The auto industry has "merit and justification" in seeking a re-look at the proposed higher tax, he said.

He had earlier pointed out that if at all the SUV tax was levied, only a handful of SUV manufacturers will be impacted. For instance, Mahindra & Mahindra will still have five models that will not be hit. Similarly, Tata Motors' two models will be out of the purview. Also, Maruti Suzuki's Ertiga, the largest selling utility vehicle now, will not be taxed. So will be Renault's Duster.

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