GST fallout: Maruti loses special tax exemption on sale of vehicles | india-news | Hindustan Times
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GST fallout: Maruti loses special tax exemption on sale of vehicles

The Maruti Suzuki enjoyed a concessional rate of 2% central sales tax (CST) on the inter-state sales since 1987.

india Updated: Aug 02, 2017 14:38 IST
Hitender Rao
Cars  being loaded at a Maruti Suzuki India Ltd manufacturing unit in Haryana.
Cars being loaded at a Maruti Suzuki India Ltd manufacturing unit in Haryana. (HT File )

Auto major Maruti Suzuki India Limited (MSIL) has lost the special tax concession it enjoyed on the inter-state sale of cars with the Goods and Services (GST) tax coming into effect last month.

Haryana, where manufacturing units of MSIL are located, had extended a special concession to the automaker on inter-state sales of vehicles. The Maruti Suzuki enjoyed a concessional rate of 2% central sales tax (CST) on the inter-state sales since 1987.

The concession, which continued till 1996, was given at a time when the rate of tax on inter-state sales was 4% for other companies. Taxation officials said from 1987 to 2007, MSIL was granted a concessional rate of 3% CST on inter-state sales as compared to 4% CST levied on all other interstate sellers. After August 1996, the tax rate on interstate sale by MSIL was increased from 2% to 3% but it was still lower by 1% in comparison with other the CST levied on other sellers.

In April 2007, the auto major was again given a tax concession by the state government when it was allowed to pay only 2% CST while other companies paid 3% CST on interstate sale. When the CST rate was reduced from 3% to 2% in 2008, Maruti was given a concessional benefit of paying only 1% CST.

“The benefit has come to an end after the implementation of GST Act from July 1. Under the GST, tax on any inter-state sales would go to the consuming state or to the central government in the form of integrated GST which will be levied and administered by the Centre on inter-state sale of goods and services.

Delhi Metro too loses exemption

The advent of GST has also meant that tax concession provided by Haryana government on goods supplied to Delhi Metro Rail Corporation for completion of the Gurgaon metro corridor will also cease. In 2010, a notification was issued prescribing a 0% value added tax (VAT) on goods supplied to the corporation for completion of Gurgaon corridor. Since the tax concession was provided under the Haryana VAT Act, it will cease to remain in effect under the GST.

Taxation officials said tax exemptions allowed under the VAT Act will not continue under the GST. The Enterprise Promotion Policy, 2015 speaks about tax incentives under the GST regime also but those can only be met from the state’s own budgetary resources.