Excise may not find seat in public buses

NEW DELHI: The finance ministry is considering a proposal to exempt excise duty on public transport buses, giving a major boost to high-capacity luxury bus manufacturers such as Tata Motors and Volvo. Such buses cost Rs 16-18 lakh including 16% excise duty.

Total duty incidence on luxury vehicles is 35% of the cost. The proposed move will encourage metros such as Delhi, Hyderabad and Bangalore to introduce high-capacity bus services. It is proposed that 25% of buses in metros would be air-conditioned.

The move aims at encouraging commuters to use public vehicles instead of using personal vehicles in major cities. ���Currently, the duty structure of both Centre and the states makes introduction of quality buses for urban transport through public-private partnership (PPP) an unviable proposition. In fact, taxes and duties on private vehicles such as cars are lower than on the buses, which is conflicting with the objectives of National Urban Transport Policy (NUTP),��� said a government official said.

���At present, both chassis and the bus body are taxed at 16% each as excise duty. Add to it a 12.5% VAT. The proposal is to remove the taxes in order to promote quality buses for intra-city transport on PPP. The loss on account of exemption could be compensated through levying corresponding higher taxes and duties on personal vehicles,��� he added.

A lot of cities have come up with bus rapid transit system (BRTS) proposals under Jawaharlal Nehru National Urban Renewal Mission (JNNURM) to address the growing problem of urban transport. Many cities are in the process of starting dedicated corridors for high-capacity buses. The corridors have been planned in Hyderabad, Jaipur and Bangalore.

���It is found that with the present fare structure, the high-capacity bus service will not be viable if the cost of buses is more than Rs 16-18 lakh in most cities,��� said an official. The source of revenue for the private operator is the daily fare collection and the income from advertisements.