Mercedes-Benz calls for uniform road taxes for long-term growth

Rationalisation of GST on automobiles remained a longstanding demand of the automakers. Earlier this month, the GST Council introduced the GST 2.0, which has reduced the total tax incidence of passenger vehicles as well as two-wheelers with engines under 350 cc, which will be effective from September 22. This has brought quite a relief among the automakers, hoping that the following price reduction, combined with the festive season offers, will boost the demand and sales of a large number of passenger vehicles and two-wheelers. Mercedes-Benz, the leading luxury car manufacturer, now advocates for an even more streamlined taxation for automobiles.

The German luxury auto giant has called for uniform road taxes across India for long-term growth. Mercedes-Benz India MD and CEO Santosh Iyer said that there is a need to cap road taxes levied by the state governments on car purchases for long-term growth of the industry. He also stated that the recent GST rate cut is likely to make the upcoming festive season the best ever for the luxury car manufacturers in India.

Mercedes-Benz advocates for uniform road tax

While the GST is a uniform tax imposed on all automobiles, varied by category, the state governments charge road taxes, which vary from state to state across India. Speaking about this, Iyer told PTI that to help the cost reduction measures trickled down to the end consumers, some uniformity is required in road taxes levied by states across the country.

While welcoming the GST rate rationalisation, he pointed out that the automotive sector remains one of the highest taxed, with state levies ranging from 15 to 22 per cent across India. "The reduction in GST, which has a clear impact on price by 6- 8 per cent, would definitely have an impact on demand in the short run, for sure, because there has been a postponement of purchases in August that should get materialised," Iyer said.

He also added that the GST rate cut brings a lot of positive sentiment and momentum to the market. "So, the next couple of months, we surely see that the overall luxury market and also Mercedes-Benz should see significant growth. And this festive season should be the best-ever," Iyer said.

The Mercedes-Benz official, however, noted that at some point, even the road taxes across states and India need to be uniform, and it may be capped at certain levels, else the GST benefit will never reach the end-consumer. He noted that there is no guarantee that state taxes will not rise further, which could lead to prices staying higher despite the GST rate cut announced earlier this month. "India has a federal structure, so that's (uniform road taxes) difficult to implement, but at least if there is an understanding that the taxation on motor vehicles is at a significantly high level, and they need to be capped at some point in time, and can't keep increasing year on year," he said.

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