GOI Ready to Discuss Reducing GST Rates of Automobiles

At the 61st Annual Convention of the Society of Indian Automobile Manufacturers (SIAM), Revenue Secretary Mr Tarun Bajaj said that the Central Government is ready to discuss reducing Goods and Services Tax (GST) rates on automobiles. He announced this amid receiving many requests from automakers across the country to lower taxes.

He said that the centre would be glad to engage with automobile manufacturers and provide necessary relief by reducing GST rates and encouraging the automobile industry. However, he asked automakers to give a deeper understanding of the reasons for the drop in sales of vehicles over the last few years.

Whether due to high taxes or other reasons, what could be done to revive a sector from the government’s end to help the industry achieve the growth targets. Few companies said that high raw material prices and upgrades to meet tougher safety and emission rules had boosted prices.

Also, they pointed out that even though the auto industry’s contribution towards India’s growth is being recognised, cars are still lamented as a luxury that only the rich could afford and are being charged the highest GST rate. The two-wheeler manufacturers pointed out that the basic mode of transportation in the country is being charged a GST of 28%, which is the highest and equal to the GST on luxury products.

The automakers stated that the Indian automobile industry is providing direct and indirect employment to 30 million people. Also, the industry has moved from importing and assembling to designing to making them in India, with both indigenous firms and MNCs making significant investments in design infrastructure. Being one of the growth indicators of the economy, they seek necessary support from the government to revive the sector.

While highlighting the achievements of the auto industry, Niti Aayog CEO Mr Amitabh Kant said that it would be impossible for India to grow at high rates for a long period without the automobile sector being the key driver of India’s growth.

Currently, automobiles, including cars, motorbikes and trucks, are being charged a GST@28%. In addition to this, states are imposing other taxes. The automakers are reaching out to the government for years to lower GST tax rates, which could help them to boost sales. Further, the automakers hoped that at least now, the government would take concrete action to reverse the decline in growth over the past few years.

For any clarifications/feedback on the topic, please contact the writer at dvsr.anjaneyulu@cleartax.in

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