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The Indian Government is considering to reduce GST rates on two-wheelers in the country. The news was recently confirmed by Finance Minister Nirmala Sitharaman. With the reduction in GST, the prices of bikes and scooters are expected to decrease by a substantial margin.
GST rate for two-wheelers currently stands at 28 per cent, which is included in the highest tax slab. However, the new tax rate proposed will bring it down to 18 per cent, marking a significant drop in the tax rates.
As a result, the IC-powered two-wheelers could very well get a huge price cut depending on the model. Also, two-wheeler manufacturers like Bajaj, TVS, and Hero MotoCorp even saw an increase in stock prices as well because of the possible new GST rates.
The two-wheeler industry has had several blows due to the new regulations and emissions norms. Starting from the inclusion of a safety braking system such as CBS or ABS depending on the engine cubic capacity, which resulted in increased manufacturing costs and retail prices to customers.
Additionally, over the past year, the entire auto industry had to make a significant shift to BS6 emission norms on its complete product range. This also resulted in huge cost for research and development, manufacturing, supply chain and at the end the retail price.
Adding to the existing problems is the ongoing Covid-19 pandemic. Due to the nation-wide lockdown, manufacturers had to suspend operation temporarily and showrooms were closed and out of business for several weeks. This added to prices of the vehicles getting increased as well.
However, as businesses reach normalcy, we are noticing a steady increase in automotive sales throughout the country. The reduction in GST should help prices to get reduced by a significant margin and attract more customers.
In related news, the Government has ordered that a valid (PUC) Pollution Under Control certificate is mandatory for Insurance renewal across the country. The new rule has been issued by the Supreme Court of India and aims to keep the polluting vehicles off the roads — here are more details.
Thoughts About The Two-Wheeler GST Expected To Reduce In India
The news about the reduction in GST rates could not have come at a better time, especially with the festive season around the corner. If the GST is reduced on the two-wheeler, it will also help industries recover from the auto recession that are associated with automotive manufactures such as third party vendors and supply chain as well.