To boost the economy, it is very important to get the auto industry back on track. In such a situation, auto companies can get a strong back from the upcoming budget. At the same time, there may be many important announcements–in the budget to promote electric vehicles on the other.
The automobile industry that is passing through extremely bad times is expected to get booster doses from the budget. From car manufacturer companies to electric vehicle makers, there may be announcement of big savings in the budget. According to sources, to give speed to the slow pace of the automobile industry, there can be several big announcements to increase tax deductions from the budget to boost the production of electric vehicles.
The condition of the automobile industry can be understood with the figures that in May 2019, the biggest fall in past 18 years in the sale of passenger vehicles has been recorded. Sales of passenger vehicles dropped 20.55% in May 2019 compared to May 2018. Whereas, the sales of commercial vehicles like bus, truck etc. have fallen more than 10 percent, sales of two-wheeler vehicles have dropped by more than 7%.
The automobile industry is considered to be the country’s economy. In such a situation, the government can make many important announcements in the budget to accelerate the slow down automobile industry. Sources say that no change in GST rates is possible. However, corporate tax of companies can be reduced to 25%. Apart from this, additional discounts may also be given on research and development. If these steps increase the profitability of car companies, then they can reduce the prices of vehicles and bring the sales back on track.
Electric vehicles manufacturers can get the largest sale in the upcoming budget. Sources say tax incentives can be found to promote the production of electric vehicles. Apart from this, investment-linked incentives can be given to install electric vehicle manufacturing unit. Apart from this, tax exemption in SEZ can be increased from 2020 to 2025.
Custom duty on the components of electric vehicles can also be reduced in many categories. Taxes can be deducted from the cost of making the batteries in the electric vehicles cheaper.