Skip to main content

GST Comes in Way of Govt's Plan to Scrap Old Vehicles

By
VOLUNTARY VEHICLE FLEET MODERNISATION PROGRAMME UNDER REVIEW
The government's ambitious programme to get old, polluting vehicles off the road has hit an unexpected speed bump: Goods and Services Tax.
The Voluntary Vehicle Fleet Modernisation Programme (V-VMP) is back on the drawing board as the government reviews its options to reward those who agree to junk their old vehicles to buy new, lesspolluting, ones.
The earlier plan was to levy lower excise tax on new vehicles bought under V-VMP . But the new tax system that is expected take effect next fiscal year will amalgamate excise tax into the overarching indirect tax called GST. The finance ministry doesn't favour giving incentives under GST and has directed the roads transport ministry to examine other methods to encourage people to scrap old vehicles.
“I had recently met the finance minister (Arun Jaitley) to discuss the proposed policy . He is in favour of providing financial benefits to people for scrapping vehicles,“ said Road Transport & Highways Minister Nitin Gadkari. “(But) the minister is not in favour of excise duty exemption in the wake of the upcoming GST law, as the GST council will have to clear it. He is of the view that we could give financial incentives under some special scheme. We are reworking the proposal as per the FM's suggestions and will then give it to the CoS (Committee of Secretaries).“
The roads ministry is working on a new proposal, which will shortly be put up before the committee comprising secretaries of the roads, steel, finance, heavy industries and environment ministries, a senior official in the roads ministry said. The draft policy currently proposes slashing excise duty by half on the purchase of a new vehicle after scrapping an old one, fair value for the scrap and special discounts from automobile manufacturers.The incentives are expected to reduce the cost of a new vehicle for the buyer by 8-12%. Further, to encourage commuters to shift to new and high capacity buses, which will help decongest roads, the policy also recommends complete excise exemption for state transport buses.
“The principles remain the same.We will incentivise the scheme for the initial 2-3 years, particularly to get off roads old polluting trucks and buses,“ said the official, who spoke on condition of anonymity .
The finance ministry has also suggested that the vehicle modernisation programme be made mandatory instead of keeping it voluntary for all heavy vehicles which are more than 15 years old.
As per the current voluntary vehicle modernisation scheme, vehicles bought prior to March 31, 2005, or those below BS IV emission standards, would be eligible for incentives if those were scrapped and replaced by new ones. According to government estimates, the V-VMP programme may take 28 million polluting vehicles off the road. It would enable generation of Rs.11,500 crore worth of steel scrap every year.
The Economic Times New Delhi,19th September 2016

Comments

Post a Comment

Popular posts from this blog

Govt’s gamble on GST cuts: What do the bond and currency markets signal?

By
  It’s not just humans who suffer from cognitive biases; markets do too. Interestingly, different financial markets exhibit distinct biases, each interpreting events through its own prism of prejudice. Take the recent announcements on GST reforms: equity markets have chosen to view them through the lens of growth, while bond and currency markets are focusing on potential macroeconomic risks—fiscal pressures and current account challenges. So, which lens captures the true pulse?Equity markets may be right in expecting GST reforms to revive consumption, which has remained lacklustre for a while. But the key question remains—will this revival come at the cost of broader macro stability?It is well known that consumption stocks have rallied since the GST rationalisation announcement. But what about bond markets? What signals are they sending since this rejig was announced from the ramparts of the Red Fort?The signs aren't encouraging. Bond prices have slumped and yields have surged sinc...
Post a Comment
Read more

Luxury carmakers urge clarity on GST rates to boost festive season sales

By
  A clear picture regarding new GST rates at the earliest will help the overall auto industry, including the luxury car segment, to regain momentum in the ongoing quarter, which generally sees enhanced sales on account of the festive season.The high-powered GST Council, chaired by Finance Minister Nirmala Sitharaman, will meet on September 3-4 to discuss moving to a two-slab taxation.In an interaction with PTI, BMW Group India President and CEO Hardeep Singh Brar said the recent speculation about the change in GST rates has caused uncertainty in the minds of consumers.Consumer interest and demand is strong, but they (prospective buyers) have adopted a wait-and-watch approach, and this delayed decision-making is impacting new vehicle sales at a certain level, he noted."Expediting clarity on GST rates is essential to get back to speed and ensure the auto sector's contribution to economic growth during this quarter is robust," Brar stated.He also hoped that the sustainable p...
Post a Comment
Read more

Sebi proposes tighter norms for green bond third-party reviewers

By
  Sebi on Friday said it has proposed to tighten the norms to appoint independent third-party reviewers or certifiers for green debt securities to align them with requirements for other ESG-linked bonds.In a draft circular, Sebi said that the current norms for green bonds, introduced in February 2023, lack detailed requirements around reviewer independence, conflict of interest mitigation, and disclosure standards that are now in place for other ESG-linked securities under a June 2025 circular.The regulator's latest proposal seeks public comments on a revised framework that would bring parity by incorporating comprehensive criteria for third-party certifiers of green bonds on non-convertible securities.Under the proposed norms, issuers of green debt securities will need to appoint reviewers who are independent of their management, directors, and key managerial personnel. These reviewers will be remunerated in a way that prevents any conflicts of interest and possess relevant expert...
Post a Comment
Read more