Tax cars on the basis of emission, not engine size: Toyota Kirloskar

| | Bengaluru

Emission levels should be the basis for taxation of passenger cars in India and not engine capacity, size or ground clearance, according to a top executive of Toyota Kirloskar Motor (TKM).

The company, which sells the Camry Hybrid in India, has also sought reduction in tax rate on such eco-friendly vehicles so that it could bring in more models with such technology into the country.

 “What we want is a stable government policy on fuels, where tax is according to carbon neutrality. It means that the emission levels of each car needs to be measured and tax needs to be levied on that basis,” TKM Vice Chairman and Whole-Time Director Shekar Viswanathan told PTI in an interview.

Taxation on vehicles should not be based on engine capacity or ground clearance, he added.

“Historically we have been doing that but the change which we wish to see is this,” Viswanathan said.

Under the current system, passenger vehicles (PVs) attract top GST rate of 28 per cent with cess ranging from 1 per cent on those less than four metres in length with petrol engine to 22 per cent on big SUVs which are longer than four metres.

Elaborating, he said that Department of Heavy Industries has already floated a paper on this and has sought the industry’s views.

“However, the auto industry is obviously divided on this issue because some people are more impacted than others but I think the most equitable way of incentivising the industry is by becoming more emission efficient,” Viswanathan said.

When asked about the company’s plans regarding introducing more hybrid models, he added:”We will continue to make hybrids, the only thing is that we want the government to reduce taxes on such vehicles.”

Currently, hybrid passenger vehicles attract 15 per cent cess over and above the peak GST rate.

“To give government full credit, they are beginning to understand, they are listening to us, the industry. Now they are educating themselves in different kinds of technology,” Viswanathan said.

He said globally the company’s parent Toyota has 34 hybrid models but in India has only one due to “punitive taxation”.

“Unfortunately, we are not able to bring more hybrid models due to punitive tax structure. If the government lowers taxes by about 10 per cent then there is good reason for us to present our case to the company principals to give us more hybrid models,” Viswanathan said.

He said that Toyota is even willing to offer hybrid technology to companies which do not have access to it right now.

“Our technology is available for everyone. Honda has it, German companies have it, Korean firms also have it... Some Indian companies don’t have it but we can always license it to them. I think that is what the government should encourage,” Viswanathan said.

 On electric vehicles, he said that the technology will take time to gain traction in India.

“It will take another 50 years. In the meantime India has a problem of reducing pollution and oil bill, which is the real challenge. So that is why the government won’t come out with an electric policy,” Viswanathan said.

The government has realised that it cannot push through a policy which is not practical from consumer point of view and for other stakeholders, he added.

When asked about TKM’s growth expectations in the current fiscal, Viswanathan said :”We want to grow with the  economy or maybe faster than the economy. We are utilising less than 50 per cent of our second plant capacity. So we need to get that plant capacity utilisation up.”

On ways to increase capacity utilisation, he said the company’s recent partnership with Suzuki for model sharing in India is one of the ways.



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