Toyota seeks tax cuts on cars to boost auto sector

Vikram Kirloskar, Vice Chairman of Toyota in India, ruled out a drastic cut in tax any time soon but proposed a gradual reduction to help the auto sec
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Vikram Kirloskar, Vice Chairman of Toyota Kirloskar Motor, thinks the auto sector in India is currently highly taxed.
Vikram Kirloskar, Vice Chairman of Toyota Kirloskar Motor, thinks the auto sector in India is currently highly taxed.

Japanese auto giant Toyota Motor has once again raised the issue of high taxes on new cars in India. The carmaker seeks reduction in taxes to set the auto sector on growth path and help it become more competitive globally. Vikram Kirloskar, Vice Chairman of Toyota Kirloskar Motor, said reduction in taxes will not only help bring down prices of cars in India, but also help the auto sector to contribute to the GDP a lot more besides offering more jobs. He proposed a plan to reduce taxes on cars by half over a 10-year period.

Kirloskar admitted any drastic reduction in taxes on cars is not a viable option right now. However, in the long run, the Centre may have to look at keeping the tax down by around 50 per cent. "Can you reduce it by half?...is it possible to do a long-term plan on how to reduce the taxation in the auto industry to make it grow pretty large, which will make it even more competitive for domestic and for export and provide large scale employment and benefit the economy?" Kirloskar was quoted by news agency PTI in an interview.

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Currently, new cars in India attract 28 per cent GST besides additional cess up to 22 per cent of ex-showroom prices based on vehicle type. Completely built units (CBU) are more expensive as they attract customs duties between 60 per cent and 100 per cent based on engine and cost, insurance and freight (CIF) value. Toyota thinks the current tax structure is way too high. "The auto industry is highly taxed. If we look at a car by the time it's produced and by the time it's sold, in most cases it is 30 to 50 per cent more than the ex-factory prices (after adding) GST and all the other taxes, including road taxes," Kirloskar said.

The auto sector currently contributes around 8 per cent to India's GDP. Kirloskar said reduction in taxes will help the auto sector to grow while it can contribute more to the economy. "I've never asked for a GST reduction. I'm just saying because is it possible to plan a long-term plan and how to reduce the taxation in the auto industry to make it grow pretty large, which will make it even more competitive for domestic and for export and provide large scale employment and benefit the economy?" he said.

Toyota currently sells SUVs like Fortuner and Urban Cruiser HyRyder besides MPVs like Innova Crysta and Vellfire and Glanza hatchback in India. It also sells Camry hybrid sedan and Hilux pickup truck too. Its best-selling models are Innova Crysta, which will soon be joined by its hybrid avatar Innova HyCross next month. Fortuner, which leads the large SUV segment, is priced from 35.09 lakh (ex-showroom).

First Published Date: 28 Nov 2022, 10:34 AM IST
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