Auto companies' ₹2,500 crore compensation levy expires on this specified date
The Indian automobile industry is bracing for changes as the proposed GST 2.0 reforms are set to redefine the tax landscape. One of the key changes is the adjustment in the tax incidence on passenger vehicles with engines above a specified capacity.
Under the new tax structure, the GST rate for such vehicles will be 40%, a decrease from the current total tax incidence. However, if the cess amount is not allowed to be adjusted, companies will have to reverse the accumulated cess in their accounting books. This accumulated cess, amounting to approximately ₹2,500 crore, has become a concern for auto manufacturers.
The compensation cess on automobiles will cease to exist under GST 2.0, which is a relief for the industry. Auto companies have demanded either an adjustment of the cess with their tax liability or a refund, but the GST law does not permit such adjustment. According to the law, accumulated cess can only be adjusted against cess liability.
Several new models from Indian manufacturers are set to hit the market, each with unique specifications. The Yamaha MT 15 Version 2.0, for instance, boasts a 155 cc engine, 56.87 kmpl fuel efficiency, and a price tag of ₹1.70 Lakhs. The upcoming Indian FTR 1200, on the other hand, features a 1203 cc engine. The Indian Roadmaster, priced at ₹43.49 Lakhs, comes with an 1890 cc engine and 20 kmpl fuel efficiency. The Indian Scout Bobber, another upcoming model, has a 1133.0 cc engine and 25.0 kmpl fuel efficiency.
The Indian Chieftain Limited and the Indian Chieftain Classic, two more models from the same manufacturer, are expected to be priced between ₹32.45 - 34.45 Lakhs and ₹34.26 Lakhs, respectively. The specifications for these models are yet to be disclosed.
It's important to note that no information about upcoming electric vehicles, cutting-edge technology transforming the automotive landscape, or specific names of the auto manufacturers expressing concerns about the accumulated cess was provided in the available search results.
As the auto industry navigates these changes, it remains to be seen how the GST 2.0 reforms will impact the sector and consumers in the long run.
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