Finance Minister to Propose GST Reduction on Automobiles

On 2 September, FM Nirmala Sitharaman mentioned that with an aim to extend relief to the automobile sector, the Centre aims to propose to the GST Council about the reduction of GST rate on automobiles.

FM added that she would not be able to decide on reducing GST on motor vehicles solely. Matters related to indirect taxation are now delegated to the GST Council. The next GST Council meeting will likely be held at Goa on 20 September.

FM said that initiatives were being planned to address issues concerning the auto sector considering the recent slowdown in the automobile sales. FM said that various measures had been implemented already so that there is a rise in demand for automobiles.

Also Read: Government plans to release the brakes on the auto sector

On 23 August, FM announced that corporates who purchase automobiles between now and 31 March 2020 will qualify for an increased depreciation cost of 30% versus the current depreciation cost of 15%.

Also, the ban on the purchase of new vehicles by the government for replacing their current fleet of vehicles will be revoked in order to encourage government departments to buy vehicles and thereby the demand amidst the auto sector increases. Additionally, the government is also planning to implement the scrappage policy.

In addition to these initiatives, the increase in the one-time fee for vehicle registration also will be put on hold until June 2020. FM mentioned that the auto industry was facing issues due to various factors. One of the reasons being the changeover in the emission norms from BS-IV to BS-VI due to which potential buyers were postponing their decision.