GST reduction on 2-wheelers will provide a much needed relief to the auto sector. Hero urges govt to do it for motorcycles and scooters upto 150cc..
These are quite turbulent times for the auto industry in particular. Apart from the slowdown in the economy, consistent and hefty price hikes, necessitated by various policy regulations, have aggravated the situation. Prices of motorcycles have risen to unprecedented levels which is resulting in buyers postponing or cancelling buying decisions.
Two-wheelers attract a GST of 28 percent which is the highest slab in the country and it is often referred to as a slab for ‘sin goods’ or ‘luxury’ items. It is quite clear that in a country like India two-wheelers are a necessity rather than a luxury. And there has been no clear clarification on this by the government so far.
GST Reduction on 2-Wheelers
With the exception of Bajaj, almost every other maker has been calling for a rate cut in GST. In a latest salvo, Hero MotoCorp’s CFO (Chief Finance Officer) Niranjan Gupta has urged the government to reduce the heavy levies on two-wheelers which will help lower the prices by a significant amount.
Niranjan says that to reduce adverse impact on government’s revenues, it can offer relief to two-wheelers only for now and ‘defer’ it for four-wheelers. He says that this will provide relief to 20 million potential customers and the increased sales will take care of the Government’s revenue deficit.
He adds that the government can, in fact, slash GST rates of two-wheelers upto 150cc displacement to 18 percent to provide immediate relief. According to Niranjan’s calculation, this step would help 16 million prospect customers. He believes that two-wheelers under 150cc can not be considered luxury goods. He advocates that the same cut can then be extended to other segments depending on the results.
The GST Council along with Finance Minister Nirmala Sitharaman is scheduled to meet on 20th September involving state representatives in Goa. There are high expectations that the minister will have favourable announcements to boost the auto sector including this GST reduction.
Source – Money Control