In a setback to the automobile industry looking for a reduction in GST rates to help tide over the present crisis, the finance ministry has said current taxes on the sector were lower than pre-GST times and the industry should rather look at reducing their costs by cutting down the royalty payments to parent companies abroad instead of asking the government to change the GST rates.
Top sources in the finance ministry said that India’s tax policy on automobiles has been quite consistent for the last three decades now in the form of allowing foreign investment and incentivising domestic manufacturing by providing reasonable protection from imports.
“The industry has on its part delivered. It has contributed by way of large investments and employment. All of a sudden, dissent in some quarters on tax rates on automobile is surprising. In fact these companies should cut down their costs of manufacturing by cutting down the royalty payments to their parent companies abroad instead of asking the government to reduce GST,” finance ministry sources said.
Finance Minister Nirmala Sitharaman’s recent statement at an industry event suggesting that concerns of the industry in GST would be taken to the GST Council, fuelled speculation that rates on automobiles may be reduced. Minister of Heavy Industries and Public Enterprises Prakash Javadekar early this month also said the central government is looking into the automobile industry’s recommendation for a reduction in Goods and Services Tax (GST) rates by 10 per cent across all categories of vehicles.
However, sources said that the GST Council is unlikely to accept a cut in rates as most states are not in favour in tampering with the tax rates during the current pandemic. The Council is now focused on GST compensation and how to mobilise resources to bridge the gap between expected and actual GST collection this year.
With the introduction of GST, multitude of taxes in the form of excise duty, special excise duties, cesses, VAT, CST etc, gave way to uniform GST. Vehicles, based on their high pre-GST incidence have been placed in 28 per cent slab. Passenger vehicles also attract compensation cess ranging from 1 per cent to 22 per cent. Finmin sources said, even with compensation cess the taxes on automobiles have not gone beyond pre-GST incidences except may be in few that were enjoying certain duty concessions.
Official sources in finance ministry said that there has been complete certainty as such in the auto sector taxation in India. Certain concessions have been provided to electric vehicles and to hybrid vehicles. Also, the most established players of the auto sector have been in India for quite some time and are used to the regulatory and taxation environment and have flourished in this regime. It is evident from the huge payouts in the form of royalty made by these auto companies to their parent companies located abroad. So the contention that high taxation in auto sector is causing a demand slump and difficulty in scaling up for auto players does not hold, they said.
Asked whether the present GST structure along with compensation cess makes Indian automobiles sector pay among the highest taxes globally, the top government source quoted above said that this was not true.
“The GST on automobiles is in the highest GST bracket across the globe without much exception. In fact, world over, automobiles are subject to taxation on the higher side. Say, for example, Japan currently has three types of taxes on automobiles – once on purchase, then an annual automobile tax (yes, an annual tax) based on engine size and finally a weight tax at inspections required once every two years. Over and above this, there is GST at the highest of the applicable rates.”
“Also, in EU, the base rate for VAT/GST on automobiles ranges from 20 to 25 per cent with plotters of other taxes varying with jurisdiction. UK charges vehicle excise duties which varies with car emission norms and has 14 rate slabs varying from 0 pounds a year to 2,175 pounds a year with surcharge of 325 pounds in the first year and 150 pounds for expensive vehicles. Besides, there are road usage charges. Further, high parking charges are common across the globe. Most of the countries provide certain concessions to electric vehicles. Given this, it would be unfair to claim that the GST rates in India are astounding or a demand dampener.”
As per figures for the month of August 2020 released by automobile body SIAM, the domestic production of 2 wheelers has outdone the numbers of August 2019. While in August 2019, 18.58 lakh units were produced, in August 2020 the numbers have risen to 18.59 lakh units. This is up from a mere 3 lakh units in May 2020. Similarly, in the Passenger Vehicles segment, while in August 2019, 1.89 lakh units were sold, in August 2020 around 2.16 lakh units have been sold.
JLR India launches new Defender SUV
Mumbai, Oct 15 (IANS) Tata Motors-owned Jaguar Land Rover (JLR) India on Thursday launched the New Land Rover Defender in India.
The new vehicle is available in two distinct body styles, the 90 (3 door) and the 110 (5 door).
According to the company, the New Defender 90 is priced from Rs 73.98 lakh and the New Defender 110 is priced from Rs 79.94 lakh (ex-showroom India).
It is offered with a 2.0 l (litre) ‘Turbocharged four-cylinder petrol engine’, producing 221 kW (300 PS) and 400 Nm of torque.
At present, Jaguar Land Rover vehicles are available in India in 24 cities.
IT, telecom stocks drag Sensex 560 points down (Ld)
Mumbai, Oct 15 (IANS) Indian stock market plunged on Thursday due to heavy selling pressure on IT and telecom stocks.
The BSE Sensex was trading over 500 points lower during the afternoon trade.
Along with weak cues from the global markets on the back of the fading hopes of further stimulus in the US, profit booking also pulled the IT stocks lower.
Around 1.39 p.m., Sensex was at 40,233.54, lower by 561.20 points or 1.38 per cent from the previous close of 40,794.74.
It opened at the day’s high of 41,048.05 and a low of 40,297.34 points.
The Nifty50 on the National Stock Exchange was at 11,818.90, lower by 152.15 points or 1.27 per cent from its previous close.
Hyundai exports over 2L ‘Made in India’ compact SUV Creta
New Delhi, Oct 15 (IANS) Bolstering the Centre’s ‘Make in India’ drive, automobile major Hyundai Motor India (HMIL) on Thursday said it has exported over two lakh units of ‘Made-in-India’ compact SUV Creta.
“The magnanimous 2,00,000 export milestone achieved by the Creta is a testimony of Hyundai’s undeterred focus and commitment to ‘Make in India, Made for the world’,” said S.S. Kim, MD and CEO, Hyundai Motor India.
“Hyundai’s state-of-the-art plant in Tamil Nadu manufactures global quality products in both domestic and international markets further providing our customers with quality time to lead a happy life.”
The compact SUV was launched in 2015.
In CY 2019, Hyundai Motor India exported 1,81,200 units with 792 customised variants according to country specific preference and demand.
The company had an export share of 26 per cent during CY2019 in passenger car exports from India.
Besides, Hyundai has also surpassed the three million vehicle export milestone earlier in 2020, exporting cars to 88 countries.
At present, the company is exporting 10 models namely — Atos (Santro), Grand i10, Xcent, Grand i10 (Nios) and Grand i10 (Aura), Elite i20, i20 Active, Accent (Verna), Venue and all new Creta.
Home sales in Delhi-NCR up 38% in Jul-Sep: JLL
New Delhi, Oct 14 (IANS) With the gradual lifting of lockdown restrictions, housing demand in the July-September quarter improved and the sale of residential properties increased by around 38 per cent during the period in Delhi-National Capital Region, according to a JLL report.
A total of 3,112 housing units were sold during the period under review, compared to 2,250 units sold in the April-June quarter.
As per the report, most of this traction was witnessed in Noida, which contributed nearly 48 per cent to the overall sales, as it caters to all price segments. Noida was followed by Ghaziabad constituting 31 per cent of the sales and it mainly caters to the mid and affordable segments.
Gurugram accounted for nearly one-fifth of the overall sales during this quarter.
“The quarter saw a preference for ready-to-move-in projects by reputed developers. The affordable and mid segment projects garnered more interest from the homebuyers as compared to high-end and luxury projects,” it said.
The emerging corridors of suburban markets such as Noida-Greater Noida Expressway, Golf Course Extension Road and Dwarka Expressway in Gurugram continue to drive sales on the back of expected augmentation in physical and social infrastructure in these markets.
Given the current business environment, developers exercised restraint and caution in launching new projects, JLL said.
Three projects were launched during the third quarter in the region, two in Gurugram and one in Noida.
“While the launches were in high-end and upper mid segments in Gurugram, the project in Noida catered to the mid segment buyers,” the report said.
Real estate developers continue to focus on offloading the existing unsold inventory and completing the projects under construction. Prices remained range-bound across most of the submarkets within Delhi-NCR during the quarter.
Manish Aggarwal, Managing Director, Delhi NCR, JLL India, said: “With the upcoming festive season, sales are only expected to increase from the current levels. Also, attractive pricing and developers doling out lucrative schemes and freebies will further incentivise the fence sitters to buy homes.”
FSCA issues norms for market access through ‘authorised persons’
New Delhi, Oct 14 (IANS) The International Financial Services Centres Authority (IFSCA) has issued a regulatory framework for market access through “authorised persons”.
The development comes with a view to widen the investor base for exchange traded products in the International Financial Services Centre and to enhance the secondary market liquidity. The move would help in deepening the market, the IFSCA said in a statement.
An authorised person is any individual, partnership firm, LLP or body corporate who provides access to the trading platform of a stock exchange as an agent of the stock broker.
Under the framework, the stock brokers or trading members — registered with either IFSCA or SEBI or both — of the stock exchanges shall be permitted to provide market access to investors through authorised persons based in foreign jurisdictions.
FM stresses on structural treatment of debt at G20 meet
New Delhi, Oct 14 (IANS) Finance Minister Nirmala Sitharaman on Wednesday said that there is a need for more structural treatment of debt in the long term.
Addressing the G20 Finance Ministers and Central Bank Governors Meeting, through video conference, she said that the process should primarily be guided by the objective of helping such countries overcome the fiscal stress caused by the pandemic, a Finance Ministry statement said.
Sitharaman underlined that it would be important to take into consideration the circumstances and concerns of both creditors and debtors and that in the process of debt restructuring, care must be taken to not saddle the debtor countries with overly burdensome conditionalities.
The ministers and Governors of G20 countries had gathered to discuss the current global economic outlook and G20’s response to the Covid-19 pandemic, along with other G20 Finance Track priorities for the year 2020.
In the first session, the Finance Minister spoke on updates to the G20 Action Plan in response to Covid-19 which was endorsed by the G20 Finance Ministers and Central Bank Governors on April 15. Sitharaman emphasised that the updated commitments in the G20 Action Plan have to be kept relevant in the current policy context for the action points to remain effective as a policy response to Covid-19.
Explaining the core guiding principles for the updation of the G20 Action Plan commitments, she highlighted the need to balance the health and economic objectives in the recovery plans.
The Finance Minister also spoke about the need to consider heterogeneity of policy responses among member countries, international spillovers from domestic policy actions and reforms required in the global regulatory regimes particularly with respect to the pro-cyclicality of credit rating downgrades.
A key outcome of the G20 Action Plan has been the Debt Service Suspension Initiative (DSSI) which provides time bound suspension of debt service payments for the low-income debtor countries that request forbearance. The initiative was initially in force till end of 2020.
During this meeting, in light of the continued liquidity pressures, the G20 Finance Ministers and Central Bank Governors agreed to extend the DSSI by 6 months, and to examine by the time of the 2021 IMF/WBG Spring Meetings if the economic and financial situation requires a further extension.