GST: Here’s why the automobile dealers’ body wants the government to reduce GST on entry-level two-wheelers | spcilvly

Union Road Transport and Highways Minister Nitin Gadkari met a team from the Federation of Automobile Dealers Associations (FADA) on August 9 to discuss matters related to the Goods and Services Tax (GST). on two-wheelers and other vehicles. FADA urged Gadkari to reduce GST on basic two-wheelers from 28 per cent to 18 per cent.

The basic two-wheeler segment comprises vehicles with displacements ranging between 100 cc and 125 cc. It accounts for more than 70 per cent of the total sales in the two-wheeler segment.

Why is FADA seeking a reduction in GST for basic two-wheelers?

“Reducing GST from 28 per cent to 18 per cent for basic two-wheelers is more than just an economic strategy; it is about empowering the common man and boosting rural mobility,” FADA president Manish Raj Singhania told news agency PTI. The organization represents more than 26,500 automobile dealers in the country.

Singhania said a revision of the GST would help revive the country’s automobile market, which had been hit due to the pandemic. FADA believes that a change in GST would ease burdens for buyers, especially those in rural India. The move would result in optimal functioning of the automotive sector and contribute to India’s goal of becoming a $47 trillion economy by 2047.

In a press release issued in May, the auto body stated that the share of two-wheelers in total automobile sales fell from 78 percent in 2016 to 72 percent in fiscal 2023 due to rising costs. According to the federation, two-wheelers should not be grouped as luxury items for GST purposes as they are an essential good for millions of people.

How GST reduction will help car dealers

FADA stated that the reduction in the rate of GST will increase the competitiveness of entry-level two-wheelers vis-à-vis other modes of transport. It will increase the revenue of the industry and also address the transition from BS-4 to BS-6 emission norms.

In recent years, prices of two-wheelers have increased significantly, affecting their affordability across India and leading to a decline in sales. This cost increase is attributed to several factors, including stricter emission standards, high raw material prices and increased taxes.

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