FinMin: Automakers should cut royalty payments to parent companies abroad, instead of seeking GST cut

Further, the ministry sources told in the PTI report that India's tax policy regarding the automobile sector has been quite consistent for the last three decades now in the form of allowing foreign investment and incentivising domestic manufacturing.

Sep 18, 2020 05:09 IST India Infoline News Service

Finance ministry sources have bashed at automakers in India, by stating they should seek cut in royalty payments to their parent companies in abroad, instead of asking the government for reducing Goods and Services Tax (GST), as per media report. The announcement comes after when Japan-based Toyota Motor Corp in an interview earlier this week, hinted for no further expansion in India citing higher taxes as the reason.

As per a PTI report, the FM sources have said that auto companies should cut costs by reducing royalty payments to their parent companies abroad instead of asking the government to reduce GST, responding to criticism on high taxes in India.

The sources also told in the report that, most globally established companies in the sector have flourished in the current taxation and regulatory regime, which is evident from the huge royalty payouts made by Indian partners to their foreign parent firms, they added.

They further reportedly added that GST rates on automobiles are less than what VAT and excise duty rates used to be in the pre-GST times.

Further, the ministry sources told in the PTI report that India's tax policy regarding the automobile sector has been quite consistent for the last three decades now in the form of allowing foreign investment and incentivising domestic manufacturing.

On Friday, Nifty Auto stock ended in the green. The index settled at 8,161.70 up 0.41%. Gainers list involved stocks like M&M, Ashok Leyland, Balkrishna Industries, Hero Motocorp, Motherson Sumi, Bajaj Auto, Bosch and Eicher Motors surging in the range of 0.36-3%.

However, stocks like Maruti Suzuki, Amara Raja Batteries, MRF, Exide Industries and TVS Motor tumbled in the range of 0.16-2.3%. 

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