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Low-floor buses: plea to end duty

business Updated: Feb 17, 2010 21:13 IST
Moushumi Das Gupta

To give a fillip to public transport in the country, the Union Urban Development (UD) Ministry has sought a complete waiver on excise duty in procurement of modern low-floor buses in the coming budget. At present, excise duty on these buses is eight per cent.

The waiver, UD Ministry officials said, is being sought on the purchase of low floor buses under the Centre’s flagship Jawaharlal Nehru National Urban Renewal Mission — a reform-linked investment programme where the Central government and states jointly fund urban infrastructure and transport projects in 65 cities across the country.

“A waiver would help in reducing the overall cost of such buses by about 10 to 13 per cent. As on date more than 30 per cent cost of buses is on account of taxes. If you want to have more high quality buses on roads to encourage public transport, reduction in taxes is necessary. This would go a long way in upgrading the age old transport fleet in states with modern low floor buses,” said a senior UD ministry official.

When the government gave economic stimulus in January 2009, the excise duty on buses was reduced from 12 per cent to the existing eight per cent.

Under JNNURM which was launched in 2005 for a seven-year period, the Centre has allocated Rs 5,000 crore for procuring low-floor buses and upgrading the public transport fleet in 61 mission cities.

“Of this the Centre has already spent its share of Rs 2,100 crore,” said a ministry official.
By the time, the flagship programme ends in 2012, there will be 15,000 modern buses in these cities. Of these, 5,177 buses are on the road.

Majority of these buses have been procured from Ashok Leyland, Tata Motors and Volvo. “Roughly, one third of the old state transport corporation buses would be replaced by these modern buses by the time the JNNURM ends. But there is a need to do more,” said an official.