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Team Studycafe | Jan 14, 2022 | Views 443473

ACMA recommends that all auto components be taxed at the uniform 18% GST rate

ACMA recommends that all auto components be taxed at the uniform 18% GST rate

The Automotive Component Manufacturers Association (ACMA) has requested the government to impose a consistent 18% GST rate on all automotive components. The ACMA urged that the government consider the upward vision of ‘RoDTEP’ (Remission of Duties and Taxes on Exported Products) rates in its recommendations for the upcoming Union Budget, as well as adopting measures to boost investments, especially R&D.

“As an intermediary, the auto component industry has advocated a consistent GST rate of 18% on all car components,” stated ACMA President Sunjay Kapur. “Due of the high 28 percent GST rate, the business has large aftermarket operations that are plagued by grey operations and counterfeits. A modest 18% rate will not only alleviate this issue, but will also increase the tax base by improving compliance.”

Furthermore, the industry group stated that current RoDTEP rates for the auto components sector are at or below 1%, and that these rates are insufficient to cover the impact of unrefunded taxes and tariffs on export products.

“The Indian auto component industry’s competitiveness is being harmed,” the ACMA added. It also requested that a provision be made to reinstate a 15% investment allowance for manufacturing enterprises that invest more than Rs 25 crore in equipment and machinery.

“This will encourage manufacturers to invest in new technologies, particularly e-mobility and its components or ancillary plant and machinery,” according to the industry group. It was also proposed that the weighted tax deduction for R&D expenditure be maintained. “The 2016-17 Budget cut the weighted deduction advantage from 200 percent to 150 percent, and from April 1, 2020, the deduction would be reduced to 100 percent.”

“The group has also made a number of recommendations to ‘reduce’ the cost of “doing business in India.”

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