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GST Reduction On Entry Level Two Wheelers - Auto Dealers' Body Approaches Gadkari
The Federation of Automobile Dealers Associations (FADA), representing India's auto dealers, has reiterated its request to review the GST applied to entry-level two-wheelers. A group of representatives met Union Minister Nitin Gadkari on August 9 to urge for a reduction in the GST rate in order to stimulate sales.
FADA presented a formal communication to the Minister of Road Transport and Highways requesting a decrease in the GST rate to 18 per cent. In the past, FADA had mentioned that motorcycles and scooters should not be categorised as luxury items or sin goods that warrant the highest GST rate.
The FADA representatives held a meeting with Nitin Gadkari on Wednesday to discuss the significance of entry-level two-wheelers in total category sales. Focusing on the specific range of models with between 100cc and 125cc, the association emphasised that this segment accounts for over 70 per cent of the entire two-wheeler sales.
Since the Covid pandemic, there has been a consistent decrease in sales within this segment, and now there is a need to uplift it. Manish Raj Singhania, the President of FADA, highlighted the importance of addressing the more than 20 per cent drop that has been observed since the period before Covid.
In an effort to boost the sales, the association has requested a decrease in GST rates, for the 100-125cc category. Currently, this category is subjected to a 28 per cent GST, which is equivalent to the tax rate imposed on some of the highest-priced four-wheeler models.
Singhania said, "Reducing the GST from 28 per cent to 18 per cent for entry-level two-wheelers is more than just an economic strategy; it's about empowering the common man and boosting rural mobility."
The association of automobile dealers comprises over 15,000 dealers who operate across the nation through more than 26,000 dealerships. Previously, FADA had mentioned that the surge in the desire for two-wheelers would trigger a chain reaction impacting numerous interrelated industries, ultimately resulting in higher tax revenue.
"FADA believes that a GST revision would significantly alleviate the burden on potential buyers, especially in rural India, and catalyse the resurgence of this vital industry segment," Singhania added.
FADA highlighted that nurturing the two-wheeler sector is crucial for India to reach its goal of becoming a $47 trillion economy by 2047. Previously, Nitin Gadkari had expressed his ambition to transform India into the globe's biggest automobile market by 2028.
At present, the Indian automotive sector's value is around Rs 7.5 lakh crore. This industry has generated over 45 million jobs and contributes the highest amount of GST revenue to both the central and state governments.
Thoughts On FADA Demanding GST Reduction For Entry Level Two Wheelers
Lowering the GST rate might make these vehicles more affordable and encourage buying, ultimately benefiting the industry and contributing to economic growth. However, there might also be discussions around the impact on government revenue and whether such a reduction aligns with broader economic priorities.
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