Hybrid cars may bear the cess load for longer
Hybrid cars in India may remain pricey for a while, with a top panel tasked to review taxes on them yet to formally meet even once, in the backdrop of a divided auto industry. Besides, any change in automobile taxes is unlikely without a comprehensive overhaul in the goods and services tax (GST) framework, two people aware of the development said.
On 11 January, the Union heavy industries ministry formed a panel of vehicle testing agencies, petroleum ministry officials and auto industry bodies to study whether hybrids should have lower compensation cess. The cess, levied on top of GST, depends on vehicle type, engine size and fuel. Generally, small cars attract a cess of 1-3%, while sport utility vehicles (SUVs) and luxury cars bear 15-22%. For hybrids, the cess for current models is 15%, taking the total tax levied on them to 43%. Battery electric vehicles (EVs) face 5% GST, and no cess.
Meanwhile, the industry is divided between companies such as Maruti Suzuki India Ltd and Toyota Kirloskar Motors
Pvt. Ltd that favour lower cess for hybrids and flex-fuel vehicles, and Tata Motors Ltd and Mahindra and Mahindra Ltd want the benefits solely for EVs. EV makers have also resisted a proposal to lower GST on flexfuel vehicles which can run on ethanol-blended fuel of up to 85%, a committee member said on the condition of anonymity.
Any attempt to lower hybrid taxes will confuse the industry, a Tata Motors executive said in January.
“Even on flex fuels, the same companies who want rationalization on taxes for hybrids are the ones advocating for incentives for this technology; the rest aren’t. The reason is, if companies are making investments on EVs, a sector that demands hefty capital for very low returns in the near future, they would want that technology to be promoted. If GST is lowered on both, there is high possibility that hybrids and flex fuel vehicles will sell more at the cost of EVs,” said a top executive at an automaker who is a member of committee.
The committee was formed after the commerce ministry’s department for promotion of industry and internal trade (DPIIT) sought the industry
No firm is an island. All strike contracts and compete with others. Conversely, when bosses decide a particular relationship would be better governed by fiat, one firm may acquire another. Between these poles are plenty of ways for firms to combine capital, knowledge or other resources, without fully tying the knot.
Such in-between arrangements are winning favour across the economy, from tech and artificial intelligence (AI) to carmaking and energy. While corporate takeovers
BSE. The same was the case for MRF Ltd, Birlasoft Ltd and JSW Steel Ltd.
Describing the launch as a bold move, analysts said more investors would hop on to the bandwagon when the number of stocks under T+0 settlement increases and trade timing is extended to normal market timings.
Currently, the same-day settlement stocks are traded from 9:15am to 1:30pm, while the normal market runs from 9:15am to 3:30pm.
However , market analysts said investor traction would increase as time progressed and more stocks get added.
“It’s a bold experiment and will gather pace when the universe of eligible stocks is extended,” said Rajesh Palviya, senior vice president (technicals & derivatives) at Axis Securities. “It’s in testing phase, so let’sseeifmorestocksareadded and timing is extended. We will keep our fingers crossed.”
“Sebi (Securities and Exchange Board of India) is a proactive regulator which tries different market developmental ideas... not all expected to be a roaring success on Day 1,” said Uttam Bagri, promoter director, BCB Brokerage Pvt. Ltd. “Anyway, T+0 is merely a beta (testing) version, and we are looking forward to the announced instantaneous settlement.”
Under the same-day settlement, trades made until 1:30pm are settled by 4:30pm. In the extant T+1, settlement happens a day after the trade is done.
In phase one, the time will be extended to 3:30pm and in phase 2 , which will be determined by regulator, instantaneous settlement will happen.
Foreign portfolio investors (FPIs) and certain institutional clients coming through custodians are excluded from phase 1 for the time being, while other clients can do same-day trades.
“...traders and investors will experience much improved liquidity as the funds will be disbursed on the day of the trade,” said brokerage firm ICICI Direct in a note. “But, on the flip side, periods of high trading activity could result in creating higher market volatility.”
The existing T+1 system will continuealongwiththeT+0settlement. Sebi implemented T+1 settlement in January 2023.