Mercedes is crying for help to help India grow by doubling its volumes in two years. Is this a lone cry? Businesses from all walks of life will agree that Mercedez is not a lone wolf; there is herd of wolves howling at the Moon of India (Modi) for attention. Growing India requires growth based policies. And predicament is our PM himself travels in a BMW make car. Then why this step motherly approach, will one ask.
Why this cry
Goods and Service Tax was introduced with fan and fare on 1st July, 2017. Coffers of government in the first month onwards hovering at INR 90K Crores (except INR 83K Crores in October, 2017) gave ray of hope to the government and citizens of India that there will be consolidation of GST rates and even reduction is many cases. The reduction in rates was carried out on 10th November, 2017; the key highlights were as under:
• 178 items of daily use were shifted from the top tax bracket of 28 per cent to 18 per cent.
• A uniform 5 per cent tax was prescribed for all restaurants, both AC and non-AC.
• The top tax rate is now restricted to luxury and demerit goods like pan masala, aerated water and beverages, cigarettes, etc.
Issue
After GST was introduced luxury car makers were ecstatic since the effective tax rate was down as compared to pre GST era. Unlike their other business counterparts, who were waiting for the National Anti-Profiteering Authority to take shape before passing the benefits of rate cut as compared to pre GST era, they immediately passed on the benefits of the rate cut to its prospective customers by slashing prices ranging from INR 1 Lakh to INR 3.50 Lakhs. The highest pre-GST tax incidence on motor vehicles worked out to about 52-54.72 per cent, to which 2.5 per cent was added on account of Central Sales Tax, octroi etc. Against this, post-GST the total tax incidence came to 43 per cent.
But it was short lived. In August, 2017, the sin cess on luxury cars and SUV’s was increased from 15% to 25%.
Therefore Roland Folger, MD and CEO of Mercedes Benz, India has requested the government that all Investors require at least a ten-year road map on regulations and taxation. Auto industry and many capital intensive industries work on long-term planning which needs regulatory and taxation certainty. Need we say more!
NPowersU Expert Opinion
Is this the ‘Athithi Devo Bhava’ that every Indian take pride about? When India opened its gates to the world and promised a moon foreign investors, believing the growth story, made a bee line with investments. They were assured of stable regulatory and taxation policies. Readers will agree that a lot goes into before any Investor, foreign or Indian, invests his heart, soul and money in a business. But year on year it is seen that they are being back stabbed. Many Indians of the traditional bandwagon are of the opinion that these investors are here for their own benefit and like Britishers loot our wealth for their own benefit. Excuse us – There is a difference between ‘Business’ and ‘Charity’.
Related Link:
http://www.business-standard.com/article/companies/end-tax-policy-flippancy-and-we-ll-double-volume-in-2-yrs-merc-to-centre-117121000316_1.html