Indian Tax Solution

How the new GST regime put the brakes on hybrid cars plan of Toyota in India

With no respite for hybrid cars in the goods and services tax (GST) structure, Toyota Kirloskar Motors has halted the production of Camry Hybrid in Bengaluru's manufacturing plant. The new tax regime combined with attendant cess has made the vehicle too costly, said the company according to a news report in the Economic Times.

In the quarter ending September, Toyota witnessed drastic fall of 73 per cent in the sales figures of Camry Hybrid compared to the same period a year ago. The drop in sales figures are attributed to 28 per cent GST coupled with 15 per cent cess on luxury cars that increased price of Camry hybrid exponentially – from Rs 32 lakh to Rs 38 lakh (ex-showroom in Delhi).

The Camry hybrid fetched half of its sales number from the national capital where the chief minister Arvind Kejriwal cut the value added tax (VAT) on hybrid cars in a bid to reduce pollution levels. The hybrid contributed 12.8 crore tax in April-June period that reduced to Rs 9.3 crore in July-September period.

In the wake of new tax regime, the company has also shelved plans to introduce a wide range of hybrids in India.

"We don't have a business case to persuade our parent company in Japan to step up investments on hybrids in Bengaluru, given the punitive tax structure," said Shekar Viswanathan, vice-chairman at Toyota Kirloskar Motor to Economic Times.

The Camry assembly facility on the outskirts of Bengaluru was launched five years ago. It also became one of the few facilities to assemble hybrid cars for the automaker outside Japan. The company said it has invested Rs 15 crore in the Camry hybrid facility in addition to Rs 24 crore on training, campaigns and service.

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