Budget 2016: Simplify tax structure for passenger cars, says SIAM

The Society of Automobile Manufacturers (SIAM) wants the government to simplify the taxation structure for passenger vehicles from the current four slabs to only two.

Currently, there are four slabs under which passenger vehicles are divided for taxation -- 12.5% for small cars, 24% for vehicles more than four metres and less than 1,500cc, 27% for vehicles more than four metres and more than 1,500cc and 30% for vehicles with ground clearance more than 170mm). 

As against this, SIAM has suggested that the government merges the 24%, 27% and the 30% tax slabs into one slab. "Keeping in view, the current scenario, we have suggested that the excise duty be 20% for this slab." SIAM said. 

Talking about vehicular pollution, SIAM believes that very old and ill-maintained vehicles pollute more than modern cars. However, automobile purchase is a big investment for most of the people and fleet modernisation effort should be based on incentives rather than a mandate. 

"We urge the government to provide a monetary incentive to those who intend to scrap their old vehicles and buy a new vehicle. This would help the cleansing process. It would help reduce the pollution as old vehicles with lower emission standards would be removed from the roads," SIAM said.

It would also promote the sales of new vehicles with higher safety standards and fuel efficiency, which will help the society at large, SIAM has said.