ACMA aims uniform 18% GST for all auto components

17 Jan 2022 CW Team

The ACMA, which represents the auto components industry, has urged the government to impose a uniform 18% GST rate on all auto parts to reduce the impact of counterfeits in aftermarket operations.

The Automotive Component Manufacturers Association (ACMA) also asked the government to consider an upward vision of Remission of Duties and Taxes on Export Products (RoDTEP) rates in its pre-Budget recommendations, claiming that the 1% or lower rate notified for the sector is insufficient to cover the incidence of unrefunded taxes and duties borne on export products.

According to ACMA President Sunjay Kapur, the auto component industry, as an intermediary, has recommended a uniform GST rate of 18% on all auto components.

Due to the high 28% GST rate, the industry has significant aftermarket operations that are plagued by grey operations and counterfeits.

With the government's emphasis on the environment, energy security, and vehicle safety, Kapur said the auto component industry must invest in newer technologies and build capacity to meet the growing domestic demand for such products.

Kapur also praised the government's policy announcements on the Advanced Chemistry Cell (ACC) battery, auto and auto component PLI schemes, and the extension of the FAME-2 scheme.

The ACMA said an increase in RoDTEP rates, claiming that the current rate is hindering the Indian auto component industry's competitiveness.

The ACMA drew the government's attention to the importance of retaining the weighted tax deduction on R and D expenditure to encourage domestic R and D and testing.

The 2016-17 Budget reduced the weighted deduction benefit from 200% to 150%, and from April 1, 2020, the deduction will be reduced to 100%.

Aside from these recommendations, the ACMA said that it has made several suggestions to reduce India's cost of doing business.

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