Reduction in GST will be swift for automobile industry

The level of Goods and Services Tax (GST) imposed on automobiles is at a high rate of 28% even for the smallest car and goes up to 50% for bigger cars. It is the industry which gives secondary and tertiary employment. Unless the government brings down the GST rate. Automobile industry won’t find a demand in this pandemic stated by Shekar Viswanathan, Vice Chairman, Toyota Kirloskar Motor Pvt Ltd.

Automobile industry have been majorly hit in pandemic and previous year slowdown of sales have been there. But post lockdown things got better, its recovering as the sale of passenger vehicle got improved by year on year sales. Shekar Viswanathan, Vice Chairman, Toyota Kirloskar Motor Pvt Ltd  talks about the demand can be revived if the government brings down GST on vehicles, especially passenger cars.

The level of Goods and Services Tax (GST) imposed on automobiles is at a high rate of 28% even for the smallest car and goes up to 50% for bigger cars. It is the industry which gives secondary and tertiary employment. He said unless the government brings down the GST rate. Automobile industry won’t find a demand in this pandemic or not. Suppose GST rate came down, then more people will like to buy the car car and better road infrastructure will be demanded he said.

Shekar Viswanathan, he said the level of GST by government should be procure up to 12%-18%, it would be a good starting point. 28% even in the pre-GST time and that has been copied.  Hybrid vehicles,  the tax rate is increased from 28% to 43% and electric vehicle charged 5%. High rate of tax will make the consumer preferences ignored. As in India hybrid car will be more preferred by consumer, rather than an electric car because India does not have adequate charging infrastructure.

He said that the manufacturer gets only 5-7% on sale of a single car. Whereas the govt gets 28% for doing nothing. In addition, the state governments get road tax, registration tax, etc. Overall, there is an element of unfairness here for the consumer.

The sales of vehicle will depend on the spread of the virus. It will also rely on, how the virus is going to spread by Dasara and Diwali festivals before Dasara and Diwali it should be under control. The second half of this year would be better than the first half in terms of sales he said.

The Union minister of Heavy Industries and Public Enterprises Prakash Javadekar said that the central government is looking into automobile industries recommendation for a reduction in Goods and Services Tax (GST) rates by 10% across all categories of vehicles. He said the announcement will be made soon.


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