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MOTORINDIA
l
September 2012
FAIASPDA
plea against hike in
taxation on auto spares
The proposed introduction of GST
will surely be a major step towards
taxation reforms. Associations like
the Federation of All India Automo-
bile Spare Parts Dealers’ Associa-
tions (FAIASPDA) have appealed
to the Government to outline the
roap map for introduction of GST,
a purely computer-based system, to
ensure smooth transition to the new
tax system.
Addressing the FAIASPDA con-
ference held in Bangalore recently,
Mr. U.K. Bhaskaran Nair, its Presi-
dent, said VAT was introduced in
April 2005 under which the taxation
rate was kept at as high as 12.5 per
cent because of which the trade suf-
fered a lot. It also proved detrimen-
tal for a growing country like India.
Its present form is quite cumber-
some and complex, involving a lot
of paper work. Hence the VAT laws
should be made simpler and more
transparent, enabling the State Gov-
ernments to garner more resources.
According to him, the States have
been successfully implementing
VAT and reaping positive benefits
thereof, as is evident from the buoy-
ancy in tax revenue after its intro-
duction. No State would lose its po-
sition of advantage by allowing the
trade to be diverted to other States
where VAT is lower.
Mr. Bhaskaran Nair went on to
disclose that according to press re-
ports the State Governments have
urged that the Central sales tax
(CST) be raised back to four per cent
from the current two per cent if the
Centre refuses to compensate them
for revenue losses. CST, a tax on
inter-State movement of goods, was
reduced from four to three per cent
in 2007-08, and further to two per
cent in 2008-09 after the introduc-
tion of VAT.
Most of the States, which have
been adversely affected, strongly
felt that in case the Government is
not able to continue compensating
States for the CST loss, it should in-
crease the CST rate from two to four
per cent.
On its part, FAIASPDA has
stressed the need to exempt automo-
tive spareparts from the ambit of the
above rules on the ground that they
are engineering items with their own
peculiar problems.
w
aftermarket
Mr. U.K. Bhaskaran Nair, FAIASPDA President
Introduction of four per cent VAT
would bring many traders within the
tax net. Any loss in VAT would be
compensated by the greater volume
of trade, and the States would start
garnering more revenue. There is
thus need to bring down the rate of
VAT on automotive spare parts & ac-
cessories from 12.5 per cent to 4 per
cent and make it uniform all over the
country, so as to save the trade and
customers from the extra burden.