Budget 2018: Government May Give Tax Benefits to Buyers of Electric Cars And Scooters
New Delhi, Jan 22: With soaring fuel prices, more people are likely to be willing to e-mobility. However, the high prices of electric vehicle components hold the budding industry down. The auto industry wishes to develop a robust research and development facilities in the country and wants the government to support it– which is its most prominent Budget 2018 expectation. Society of Indian Automobile Manufacturers (SIAM) expects that the government must restore incentives on research and development in form of weighted tax deduction. The industry also expects that incentives must be given to buyers, including income tax rebates. It also wants policies to make EVs more attractive to buyers.
The Union government had reduced the incentives in form of weighted tax deducted from 200 to 150 per cent when it implemented Budget last year. Now, they demand that the incentives must be restored to its previous value.
SIAM deputy director general Sugato Sen told Economic Times that the government had cut down the incentives, saying the corporate tax will be brought down to 25 per cent from 30 per cent. Since the industry is investing heavily on the research and development, it demands that incentives must be restored.
He further said that e-mobility must be given preferential treatment. The industry has identified a few components that should be levied lower import duty. “We have identified a few components specific to electric vehicles for import with lower duty. We have also said that if the government is considering a higher tax rate for completely knocked down (CKD) units as relates to electric vehicles, it should be defined properly…so nobody gets on the wrong foot after importing”, Sen told ET.
Vice-chairman and whole-time director, Toyota Kirloskar Motor (TKM), Shekhar Vishwanathan, said that steps must be taken to improve logistics cost of river transport. He also said that rail transportation must be modernised.
Tata motors said that rationalization of tax slabs and reduction of cess by the government will boost consumer sentiments. It said specific focus on promotion of infrastructure will provide an impetus to the commercial vehicle segment. For passenger vehicles, the company said it was looking forward to dual tax rates. He also said that the company expects the government to announce policies that make electric vehicles attractive for users.
The Society of Manufacturers’ of Electric Vehicles demanded that the government must introduce incentives for prospective buyers of EVs, including tax rebates. The cost of EVs must be brought down by local manufacturing of components of EVs. Encouragements must be given to manufactures to produce components in the country to bring down the high cost of ownership of electric vehicles.
“The government can take special measures to encourage manufacturers to produce components locally…the existing subsidy module (also) needs to be enhanced for the next six years as compared to previous periods of 6-12 months on account of the high cost of ownership of electric vehicles. The government need not spend public funds but could possibly look at rebates in income tax for consumers adopting electric vehicles such as in countries like Norway, France, Canada, Denmark and Netherlands”, Sohinder Gill, director, told ET.