Maruti TrueValue plan hits tax block

Maruti Udyog Ltd has blamed the Gujarat government's sales tax policy for the company not able to launch its TrueValue outlets in the state.

TrueValue outlets, which are operational in almost all states, help one to buy second-hand Maruti cars at the right price.

The outlets also discourage the grey market, which ends up duping may second-hand car buyers.

MUL has not set up TrueValue outlets in Gujarat as the state government claims a 12 per cent sales tax on cars resold through these outlets.

According to Jagdish Khattar, managing director, MUL, the Gujarat government does not have a proper sales tax policy.

"We have been trying to convince the government that paying a 12 per cent sales tax on a car that has already been sold once is inappropriate. Our officials have constantly been holding discussions with the government on this issue," Khattar said.

He added that the Gujarat government has assured MUL that if Maharashtra decides not to levy sales tax on vehicles sold through TrueValue outlets, then Gujarat will follow suit.

"We expect the Maharashtra government's announcement within a month," Khattar said.

Kinji Saito, director (marketing and sales), MUL, said though there are many in Gujarat who are interested in buying second-hand cars from Maruti outlets, this can be possible only if talks with the government are fruitful.

"TrueValue outlets provide Maruti-certified cars with a one-year warranty and three free services with all formalities completed. The high sales tax is the only reason for the company not launching the outlets in the state," said Arvind Saxena, general manager (sales), MUL.

There are 59 TrueValue outlets in 37 cities in the country.

Under the TrueValue scheme, MUL purchases a Maruti car which is up to seven years old and having a mileage of up to 100,000 km. The price of the vehicle is fixed on the basis of its condition. The car is completely overhauled and repaired before it is resold.

Once a new car has been sold, the sales tax is paid by the customer, which the company deposits with the state government. However, when he sells the car to another person no sales tax is levied.

However, the Gujarat and Maharashtra governments claim a 12 per cent sales tax on second-hand cars sold through Maruti outlets.