Simplify taxes on used cars, auto traders demand

 Eyeing vast Indian middle market, automobile traders have demanded simplification of taxes on used cars under the proposed GST regime. Currently GST is silent about the used car industry.

It has also demanded that Finance Minister Arun Jaitley announce a subsidy on new vehicles for the buyers, who junk their old vehicles, in the Budget to be presented on February 1. 

“There is too much disparity in used car taxation and policy across states. Simplification may reduce prices, fuel demand and drive better tax compliance. Tax rate for used cars should be lower than new cars, since the government would have already collected tax at the time of first point of sale,” said Mehul Agrawal, founder of CARS24, a used car selling platform, in an interaction with DH. 

According to Agarwal, the used car industry in India is witnessing double digit growth each month. This is in contrast to the new car industry that has been affected by multiple issues like ban on high capacity diesel engines in NCR, increased taxes and much talked about demonetisation.

The auto sector struggled in 2016 due to 1% infra cess on small cars, 2.5% on select diesel cars, 1% luxury tax on premium cars, 4% tax on higher engine capacity cars announced in the Budget last year.

Demonetisation has further impacted the auto sector, he said, adding that the government should desist from imposing any new cess or taxes in the Budget this year on auto industry.