Tougher norms for import of cars

The government on Wednesday tightened norms for import of high end cars and sports utility vehicles by hotels, travel agents and tour operators following reports of misuse of tax concessions available on import of vehicles for tourism.

"In order to ensure proper and intended use of vehicles under Export Promotion Capital Goods (EPCG) Scheme, customs authorities will endorse that such vehicles have to be registered as a vehicle 'for tourist purpose only' while clearing such vehicles," a Directorate General of Foreign Trade (DGFT) circular said.

There have been reports that high value vehicles imported under the scheme have been sold to many politicians, businessmen and actors. The revenue department, which conducted enquiries in many such cases, has collected penalties and due customs duty from many persons.

Commenting on the decision, Federation of Indian Export Organisations (FIEO) President Ganesh Gupta told PTI, "One can import a vehicle at a concessional rate of up to 5 per cent under the scheme against about 100 per cent duties under normal imports."

The DGFT has stipulated that import of motor cars, SUVs and all-purpose vehicles under the EPCG scheme would be allowed only to hotels, travel agents, tour operators or tour transport operators and companies owning or operating golf resorts whose total foreign exchange earning from these specific businesses in the current and preceding three licensing years is Rs 1.5 crore (Rs 150 million) or more.

However, the parts of motor cars, sports utility vehicles or all purpose vehicles such as chassis cannot be imported under the EPCG Scheme.

"The move will plug the loopholes and will promote the genuine transactions of motor cars and sports utility vehicles for use by hotels, travel agents and tour operators," Gupta said.

"The move would make the purpose of import of vehicles 'absolutely clear', besides facilitating registration, the circular said.

It further said, in all past cases where the Export Obligation Discharge Certificate (EODC) has not been obtained by June 30, 2008 and where vehicles were not registered as Tourist Vehicles, EPCG authorisation holders will get them registered as tourist vehicles, by August 31, 2008.

The government vehicles imported under EPCG would now have to be registered as a tourist vehicle, the circular added.