Haryana cuts sales tax on Maruti cars

In yet another concession to auto-giant, Maruti Suzuki India Ltd (MSIL), the Haryana government on Wednesday decided in-principle to reduce the rate of Central Sales Tax (CST) on inter state sale of MSIL vehicles from the existing two per cent to one per cent from November 1, 2008.

The company has vehicle manufacturing units in Gurgaon and Manesar. This means that rate of CST to be levied on inter-state sale of vehicles manufactured by Maruti Suzuki to registered dealers will now be one per cent. Maruti is expected to take a call on pricing of its cars shortly.

The in principle decision was taken during a meeting of MSIL representatives led by their Managing Director, S Nakanishi with Haryana Chief Minister, Bhupinder Singh Hooda on Tuesday. It, however, will require the stamp of approval from the Council of Ministers.

Sources said that following the one per cent CST reduction from November 1, the state government will get a hit of approximately ₹70 crore in terms of tax revenue till March 31, 2009. The MSIL sells about 89 per cent of its vehicles outside Haryana. " The CST, anyway, will get reduced to one per cent under the nationwide CST phasing out programme from April 2009,'' officials said.

Maruti has always been given a 1 per cent rebate on CST by the state government in the past and following the 1 per cent reduction in CST from 3 to 2 per cent in this year's budget, a subsequent reduction was overdue. Other automobile companies like Hyundai, Ford and TVS also get similar treatment from Tamil Nadu government since 1999.