New Delhi, Jan 18 (FN Agency) The Federation of Automobile Dealers Association (FADA) has sought reintroduction of the depreciation scheme which was valid only till 31 March ’20 to be further extended for FY 2022-23 and introduction of benefits of claiming depreciation on vehicles for individuals paying income tax in its recommendations for the Budget to the Finance Ministry. Welcoming the Government’s decision for increasing the depreciation rate for all types of vehicles purchased before 31 March 2020 as a temporary measure to revive growth, it has pointed out that allowing individuals to account for depreciation will not only help in increasing the number of individuals filing their IT return but will also help to revive automobile demand (especially two-wheeler).
Since the vehicles depreciates for both corporates as well as individuals, it was only proper that the salaried class gets the same benefit, said FADA. To bring the industry and auto retail trade back on the growth path, the Indian automobile retailer body has called for regulating and reducing GST rates on two wheelers to 18% on the grounds that the 2W is used by the lower middle class and rural segment to travel for their daily working needs and hence the rationale of 28% GST + 2% cess for luxury products does not hold good for this category. A reduction in GST rate will help counter the price hike of vehicles being carried out every 3-4 months due to increase in metal prices. The auto body has sought a uniform GST rate of 5 % on the margin for all used vehicles, to create a win-win situation for the Government, dealers, and vehicle owners.
The rate of GST on used cars is currently 12% for vehicles which are sub 4000 mm and 18% for vehicles above 4,000 mm. The reduction in GST will help the industry to shift from the unorganized to organized segment and help in putting brake on tax leakages. Besides FADA wants the benefit of reduced corporate tax to 25% for private limited companies with turnover of upto Rs 400 crore to be extended to all LLP, proprietary and partnership firms as most traders within the auto dealership community fall in this category. This will boost the morale of traders who employ 5 million people, of which 2.5 million are on direct employment.