Thursday, 21 July 2011

Volkswagen India, Bajaj Auto and Mahindra upset with changed rules for VAT set off in Maharashtra

Maharashtra state government’s tax policy changes have affected auto manufacturers noticeably. The state isn't making things easy with no relief regarding VAT exemption despite multiple high profile meetings with the Maharashtra government. Earlier in 2011, the state government ‘changed rules for VAT set off.’ The result has been less than flattering with refunds to auto companies having been deferred.
As per the new notification, auto companies are given an incentive for vehicles sold in Maharashtra, and not elsewhere. The domino effect has resulted in 15-20% sales cuts each month. President of automotive sector, M&M, Pawan Goenka, had this to say “There was no question to come to Maharashtra, only for this incentive, it looked attractive; other states were offering much better incentives and SOPs.”

The Nasik Municipal Corporation has withdrawn octroi concession granted to M&M due to financial woes, which makes Mahindra an aggrieved auto major. Bajaj Auto sees its bottom line hit as the state has deferred VAT refunds of Rs 1100 crore, a cumulative amount over the past 5 quarters. Volkswagen India Chief, Dr John Chacko has said that pending issues with MH Government need to be settled for expansion plans to come into effect. The changed rules for VAT set off have made auto companies take notice with most now looking at other states that offer clarity in policy, and faster clearances


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