BackRoads ministry may seek cut in excise duty on public transport vehicles
Excise duty for public transport vehicles, likely to come up for revision in budget, is currently at 8%
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New Delhi: The roads ministry may request the finance ministry to cut excise duty on public transport vehicles in the budget to encourage sales, reduce traffic snarls and cut pollution.
“The secretary is likely to have a discussion with the finance minister ahead of the budget tomorrow and will take up this issue," said a road ministry official who did not want to be named.
The finance ministry has started consultations for drafting the national budget due to be presented in the first week of July.
“We are discussing that the excise duty be brought down to 2% or even zero," the official said.
The excise duty for public transport vehicles, including buses, which is likely to come up for revision in the budget, is currently at 8%. The Congress-led United Progressive Alliance (UPA) government had reduced excise duties across different categories of vehicles in the range of 3-6% to boost sales in the interim budget it presented on 17 February. This current duty exemption is valid till 30 June.
“The idea is to bring down excise duty on public transport vehicles and make them cheaper. This will help encourage use of public vehicles over private vehicles and bring down our import bill," the official said.
Another road ministry official, who also requested anonymity, confirmed that Vijay Chhibber, secretary of road transport and highways, is meeting finance minister Arun Jaitley on Tuesday.
“The ministry will also request a higher allocation of funds of ₹ 35,000 crore. We have been allocated ₹ 1,44,000 crore ( ₹ 1.44 trillion) in the 12th (Five-Year) Plan, of which only ₹ 37,000 crore has been released to our ministry in the first two years. We are eligible for ₹ 1,07,000 crore over the next three years," the second official said.
“The call on the private vehicle excise duty and whether it should be continued or not is made by the department of heavy vehicles in keeping with their demand trends. We are making a request on account of our mandate for traffic management," he added.
A cut in excise duty is not a solution to encourage public transport, according to S.P. Singh, senior fellow at the Indian Foundation of Transport Research and Training, a Delhi-based research firm.
“Hardly any manufacturer has passed any benefit of excise duty cuts to the customers. They just readjust their discounts but do not reduce the price of the vehicles," Singh said. “So even if excise duties are cut, there will not be a trickle down. Moreover, public transport is a much larger issue. People cannot be encouraged to use public transport by reducing excise duty or such taxes alone."
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