India lowers auto consumption tax


On February 29, this special day was indeed a day worth celebrating for most Indian automakers. On the same day, the Ministry of Finance of India adjusted various types of auto consumption tax in the 2008-09 Budget. This is India's second reduction in auto consumption tax since 2006.

Mainly for small cars

The tax reduction measures for different types of vehicles have different rules, mainly for small cars. According to Indian standards, a small car is a car with a body length of no more than 4 meters, a gasoline engine with a displacement of 1.2 liters, or a diesel engine with a displacement of 1.5 liters. According to the annual budget of the Indian Ministry of Finance, the consumption tax on small cars sold on the Indian market has dropped from 16% to 12%. In order to encourage the use of public transport, bus buses also perform the same standards. In addition, the consumption tax on hybrid vehicles has been reduced from 24% to 14%. Electric vehicles have dropped from 8% to 0, and the consumption tax on certain parts of electric vehicles has also dropped from 16% to 0. The Indian government’s significant tax cuts for these two types of vehicles are to develop new energy and energy conservation. Car.

The tax reduction policy has brought cheers. After the policy was announced, some auto industry stocks in India began to rise. Suzuki India’s Maruti Suzuki, a subsidiary of India’s subsidiary, occupies half of the Indian car market, and shares rose 3.8% on the day to Rs.867 per share.

However, large automakers have apparently lost some of them. Large vehicles have been excluded from this tax cut. "We hope that the tax cuts will target all types of cars," said a spokesman for General Motors India.

Ford Motor Company has always hoped that India can implement a unified auto consumption tax system. This tax cut policy obviously ignores this requirement. Arvind Mathew, president and general manager of Ford India, said: “Reducing the consumption tax on small cars will actually make the gap between small cars and other car markets even wider. Today, the consumption tax on medium-sized cars remains at 24%, which is higher than that of small cars. Double, this is disappointing."

In fact, India's auto market accounts for more than two-thirds of the small cars. India has also been committed to becoming a global small car manufacturing center. This time, the government is biased towards small cars on the policy of reducing consumption tax, and it is also based on accelerating the development of the small car market. Considerations.

Dual factors play a role

Behind the tax cuts, economic and political factors are at work. Economically, over the past two years, people’s optimism about the auto industry has slowly changed. The situation in the auto industry seems to be getting more severe. Limited consumer credit and rising loan default risk make the automotive market significantly less demanding. The registration rate of commercial vehicles, medium-sized and heavy-duty vehicles is constantly declining. Steel prices, rupee appreciation, cost pressures, automakers are in desperate need of a strong driving force to reverse market conditions and stimulate consumer demand. Therefore, they have high expectations for the Ministry of Finance and hope to receive government policy support.

In politics, the Indian election will be held next year. In the report of the Minister of Finance, the idea of ​​"the welfare of the entire people" was clearly infiltrated, and one of the policies of "eliminating the 7.7 billion U.S. dollars in debt of the farmers" has aroused strong social repercussions. The "tax cuts" are the same as those of the "US$7.7 billion debts written off by farmers." Before the election, the people were given some benefits. This is an inevitable choice for any wise government. The tax reduction is undoubtedly a pleasure for car manufacturers and consumers. With the reduction of auto consumption tax, manufacturers have room for price cuts, and consumers can also enjoy the benefits of car price cuts.

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Consumption tax is a type of tax that is selected from a small number of consumer goods on the basis of the general value-added tax on goods. The main purpose is to regulate the product structure, guide the direction of consumption, and ensure national revenue. Consumption tax is generally divided into in-price tax and out-of-price tax. Any tax that constitutes part of the price, and taxation subject, which is the constituent element of price, is an intra-price tax. The out-of-price tax is borne by the purchaser and the seller’s purchase includes sales and taxes.

The Central Tax Law of India stipulates that consumption tax shall be paid by manufacturers and producers of goods.

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