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There will be no reduction in GST for the automobile industry. This decision has been taken by the GST Council after a meeting. The GST Council held a meeting in Goa on 21 September to discuss the reduction of taxes on automobiles.
The council members decided that the current 28 percent GST rate would continue. The automobile industry in India is facing the worst slowdown it has seen in years. Sales have dropped to new lows and the growth projection has taken a rapid turn for the worse in the past few months.
A few manufacturers including the likes of Maruti Suzuki, had even resorted to shutting down of production for a few days to offset the number of cars in stockyards. The slowdown has been attributed to a number of reasons.
The switch from BS-IV to BS-VI emissions norms has many people confused as to when the right time to buy a car is. Thousands of buyers have postponed their purchase, waiting till the last few weeks of the BS-IV era, waiting for a fire sale or a stock clearance sale and low prices.
The government has been trying various ways to stop the slowdown in the automobile sector. One of the methods suggested by the government was to come up finance melas and the like to make it easier for people to purchase.
Banks and other financial organisations are trying to do the same. Yet another method that was suggested was the reduction of taxes. After a lot of demand in the reduction of GST on automobiles, the GST council met in Goa.
However, the council did not heed to the number of people suggesting a decrease and decided that the taxes on automobiles would remain the same. According to the council, the reduction on GST rates for automobiles will lead to a major loss in revenue and that to the tune of ₹ 50,000 crore.
This is the main reason for the GST Council to decide against the reduction of taxes. The automotive industry is one of the largest contributors to the economy and to the treasury of the government through taxes. Hence, the GST council is jittery about reducing taxes.
Thoughts On GST Council Not Reducing GST On Automobiles
The GST council is right in the fact that reduction of taxes will result in a huge revenue losses. However, the GST council should have also taken into consideration the danger posed to the entire economy if the automobile industry slowdown continues.
The damage done will be worse than the revenue loss. It seems like it is left to manufacturers and automobile financiers to tackle the slowdown in the industry.