Budget 2016: Auto sector wants excise on large cars to be reduced to 20%

New Delhi: Automobile industry body SIAM wants the government to reduce excise duty on large cars and SUVs to 20 per cent from the current rates of up to 30 per cent in the upcoming Budget.

Besides, the Society of Indian Automobile Manufacturers (SIAM) has also asked Finance Minister Arun Jaitley for an incentive scheme for scrapping of old vehicles in the Budget.

"We have asked for 20 percent excise duty on vehicles that currently have excise duties of 24, 27 and 30 percent," SIAM Director General Vishnu Mathur told PTI.

Explaining the rationale behind the demand, he said, "From 12.5 to 30 percent, the differential in excise duty has grown over the years. We are asking for two rates -- one for small cars and one for large vehicles."

Currently, small cars that are less than four meters in length attract excise duty of 12.5 per cent, while cars with more than four meters length but with engine of less than 1,500 cc capacity attract a duty of 24 percent.

Further, vehicles with engine capacity of more than 1,500 cc are charged an excise duty of 27 per cent and while those with ground clearance of more than 170 mm attract an excise duty of 30 per cent.

The demand for excise duty cut is among the main proposals that SIAM has put before the finance minister ahead of the Budget.

"The second thing which we are asking is incentive scheme for scrapping of old vehicles," Mathur said.

Elaborating on the scheme, Mathur said the move would help reduce air pollution.

"We want this vehicle scrapping scheme to be incentive based and not a mandatory one. Even if 15-20 percent old vehicles go off the road, it will make a huge difference. Besides, the scheme would be revenue positive for the government," Mathur said.

The government will present the Union Budget for 2016-17 on February 29.