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The GST rates on automobiles is soon set to drop. Finance Minister Nirmala Sitharaman has indicated that the government is considering the reduction of GST on automobiles. The government may have arrived at this decision in order to boost sales in the automotive industry that is currently seeing a slump in sales.
The Indian automotive sector has witnessed a slowdown in terms of sales. Almost every automotive manufacturer is posting a drop in sales figures. This could be blamed on many reasons, including weak buyer sentiment, increasing costs of purchase and the government's push towards electric mobility.
It is an obvious fact that there is a slowdown in the Industry and the government too is aware of it. It was only a few days ago that the government announced its decision to purchase new cars.
For a long time, there was a ban on government departments spending money on the purchase of new cars to replace existing cars in the department. In order to help increase sales of the automotive industry, that ban was lifted recently.
Now, Finance Minister Nirmala Sitharaman has indicated that GST on automobiles could be reduced. The government in its push towards electric mobility had reduced the GST on electric vehicles from 12 percent to 5 percent earlier this year.
However, petrol, diesel, LPG/CNG-powered vehicles all come under the 28 percent GST slab and that pushes up prices considerably. The government believes that lower prices might draw more people to buy vehicles and hence is considering the reduction of GST on automobiles.
She was quoted as saying that the government has recommended the GSt council to cut tax rates on automobiles. It appears that the ball is in the court of the GST council.
The Finance Minister was quoted as saying, "The government has been in consultation with a lot of sectors and we are listening to their inputs. Several steps have already been taken including steps to enhance liquidity and lending in the market to boost the demand in the automotive sector."
Thoughts On Government's Consideration Of Reduction In GST Rates For Automobiles
It was on 01 July, 2017 that the Indian government introduced GST (Goods & Services Tax) in India. New tax slabs were set for various segments and the automotive industry came under the highest slab of 28 percent.
While we cannot really blame the high GST rates for the slowdown in the auto industry, we certainly can say that it may help boost sales by just a bit, thereby helping the entire industry to recover.