The All India Motor Transport Congress (AIMTC) is a non-political and non-profit organisation representing the road transport sector. The organisation has collaborated with the government during crucial initiatives. In its budget proposal, the AIMTC makes several recommendations to enhance the viability of the sector: I.
Status of ‘specific segment’ The road transport sector (both cargo and passenger segment) is an essential services provider. It deserves the status of ‘Specific Segment’. Diesel, accounting for 60% of input costs, and tolls (14%) constitute a significant portion of the expenses.
The sector faces challenges in accessing working capital loans despite being subjected to advanced tax payments. II. Bringing diesel under GST AIMTC suggests uniform diesel prices across the country under GST to reduce logistics costs and support the manufacturing sector.
III. Reduction in GST on essential and non-luxury items AIMTC advocates for a reduction in GST on non-luxury items related to the transport sector like trucks, tyres, spares, third-party premium, etc. IV.
Removal of restrictions on imports of tyres The continuous upward trend in tyre prices, triggered by restrictions on imports, is adversely affecting the economic viability of the truck operating business. Domestic tyre manufacturers are capitalising on this by pricing their products at a premium. This pricing behaviour, characterized by cartelisation and price-fixing among major companies, leads to profiteering at the expense of consumers.
V. Revocation of TDS U/S 194 C on the sector The majority of transactions, especially with small truck operators constituting 85% of the commercial vehicle population, involve cash payments for freight. While there are provisions exempting small truck operators (with not more than 10 trucks), the reality is that many service recipients, particularly small and medium enterprises, make cash payments and deduct TDS on the spot.
Nationwide, cash payments are prevalent in freight services, impacting small truck operators (85% of commercial vehicles) with a direct hit to their cash flow due to a 2% TDS deduction. Unorganised small operators face difficulties in maintaining TDS records, leading to inconsistent deposition and unfair practices in the industry. Millions of TDS deductions go unaccounted for, which create tracking challenges and serve limited tangible purposes.
The sector, already struggling to secure easy finance, grapples with high working capital costs, narrow profit margins, and delayed client payments. The additional burden of a 2% TDS deduction exacerbates cash flow challenges crucial for sustained operations. VI.
Revocation of TDS U/S 194 N Road transport operations, operating 24/7, heavily rely on truck operating costs, constituting approximately 95% of freight revenue. The majority of expenses are handled by on-road drivers, often with limited literacy and confidence in digital transactions. Challenges such as limited availability of 24/7 RTGS/NEFT banking, fuel stations lacking digital infrastructure, and cash collections for highway fees hinder seamless digital transactions.
Section 194N, imposing a 2% TDS on cash withdrawals for the road transport industry, has created significant disruptions. This provision has negatively impacted the sector’s cash flow. To address these issues, it is suggested that such harsh provisions be reconsidered.
It is submitted that an amount of Rs35,000 cash per vehicle per trip is permissible under Section 40A (3A) of the Income Tax Act and it is continuing till day, considering the transport sector as a ‘Specific Segment’. The plea is for exemption of additional TDS on cash withdrawal u/s 194N of Income Tax Act considering the sector as a ‘Specific Segment’. VII.
Addressing anomaly in presumptive tax under Section 44 AE of the IT Act The AIMTC emphasises the need for the rationalisation of Section 44AE of the IT Act, initially introduced in 1994 to bring small truck owners into the tax net. The presumptive income calculation was originally set at Rs7,500 per goods vehicle per month but was amended in 2018 for heavy goods vehicles (over 12 MT) to Rs1,000 per tonne per month on gross vehicle weight (GVW). AIMTC argues that this amendment, applying presumptive income to GVW, is unjustifiable and burdensome for small operators.
This amendment places a heavy burden on small operators, constituting 85% of the trucking population who own less than 10 trucks, revealing them as lower-income entrepreneurs, as GVW includes both laden and unladen weight. Higher weight capacity results in higher costs, such as fuel, tolls, maintenance, insurance, and labour. Increased capacity may stress freight rates due to supply and demand forces.
Despite paying various taxes, including income tax under the Presumptive 44AE scheme, their financial burden needs reduction. In light of these challenges, AIMTC suggests the rationalisation of presumptive income under Section 44AE to Rs300 per tonne per month per vehicle, based on the laden weight mentioned in the vehicle’s registration certificate. The author is chairman, core committee, and former president of the All India Motor Transport Congress.
