BS4 Vehicles To Remain Operational In BS6 Era Till End Of Registration: Finance Minister

The Finance Minister has stepped in with some hopeful solutions to the current economic situation in the automotive sector

• 32-slide solutions announced by Finance Minister Nirmala Sitharaman, some specific to auto industry.

• Banks agree to reduce interest rates on automotive loans.

• BS4 vehicles purchased till March 2020 will be valid till the end of their registration period.

• Government’s scrappage policy for vehicles older than 15 years to be introduced soon.

• Proposed increase in vehicle registration fees postponed till June 2020.

As the automotive industry in India faces its biggest decline in recent years, Finance Minister Nirmala Sitharaman has just announced a range of supposed solutions to help stabilise the situation. Presented as a series of slides, some of them were specific to the auto industry. They are as follows:

• BS4 vehicles can be used till registration period: In the light of upcoming BS6 emission norms in April 2020, the government is addressing some of the concerns regarding current BS4 compliant vehicles. As per the announcement, these vehicles will be allowed to run as long as their current registration period allows.

• BS4 vehicles purchased till March 2020 to be valid: All BS4 cars purchased will be allowed to run as long as they were bought before or till March 2020. It sets a kind of deadline for automotive manufacturers to get rid of their BS4 compliant inventory.

• Increased vehicle registration fee deferred to June 2020: The government had recently proposed an exponential increase of vehicle registration fees. However, given the current state of the industry, this decision has been deferred until summer next year.

• Higher depreciation for vehicles purchased till March 2020: This one pertains only to cars bought between now and till 30th March 2020 wherein the usual depreciation rate of 15 per cent has been increased to 30 per cent. Increased depreciation is mainly a tax incentive for car owners, usually those who are non-salaried professionals. For such individuals, the depreciated value of the car is deducted from their annual taxable income.

• Scrappage policy coming soon: Near the end of July 2019, the government had proposed a scrappage scheme for vehicles older than 15 years. As per this latest announcement, this policy is in the works and will be announced shortly.

• Cheaper loans: The change that may prove to be the most effective in aiding the auto industry right now is that banks have agreed to reduce the rate of interest for auto loans. Lower interest on loan repayment should incentivise more loans for purchasing vehicles.

Related: Top 8 Reasons Behind Automotive Industry Slowdown In 2019