Finance Minister Nirmala Sitharaman

Government unlikely to trim GST on automobiles


The Automobile Industry is seeking lower GST rates. However, the government is unlikely to trim the GST on Automobiles. The Center has pondered on reducing GST for automobiles for some time. But currently, because sales are on the rise and the inventory has not been built up as a result of the shift from BS4 to BS6 emission standards, it does not appear likely to be. In this article, we will discuss the government’s decision and the latest updates related to GST on Automobiles in detail.

GST Rates on Automobiles

All automobiles in India attract a GST rate ranging between 18% and 28%. This rate excludes electric vehicles and ambulances.

GST is 5% for electric vehicles. On the other hand, the GST for the period up to 30 September is reduced to 12% for ambulances.

Under the current Tax Regime, A cessation is imposed between one and twenty-two percent, and State governments, in addition to this, collect a tax on roads.

Government unlikely to trim GST on Automobiles

Finance Minister Nirmala Sitharaman had stated this was certainly an excellent idea to trim GST Rates for two-wheelers at a meeting held at the chamber for the industry. She said it in response to a query regarding the requirement to decrease the GST rate on two-wheelers since this class was not either a sin goods category or a luxury.

But till now this subject didn’t make it to the GST Council. The Revenue Secretary Tarun Bajaj stated, however, that the administration is ready to consider a tariff review but has not undertaken any cutbacks.

Bajaj said in his conference organized by the Society of Indian Auto Manufacturers (SIAM) on Wednesday.

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Automobiles Industry on trimming GST Rates

The tax problem was one of the major topics of debate during the current SIAM meeting.

“With ICEs, CNG, biofuels, or EVs I do not think the auto sector could return if we don’t address the customer’s affordability issue,” said RC Bhargava, Chairman, Maruti Suzuki.

The high tax structure and additional expenditures incurred in complying with the new pollution and safety standards have made cars more costly and inexpensive for many.

Similarly, Hero MotoCorp NSE’s largest two-wheel automobile manufacturer requested the government to explore a phase-by-phase reduction in GST beginning with the tax rate on motorcycles of up to 150 cc in an 18% GST slab.

Lastly, Venu Srinivasan, Chairman of TVS Motor Company also states the same opinions. As per his opinion, The two-wheelers, which are the primary means of mobility in the country, attract GST at 28 percent, the highest level in comparison with luxury goods.

In addition, he mentions that the car industry has shifted from importing to assembly and manufacturing in India, with both local and MNCs making huge investments in design infrastructure, which offers direct and indirect employment to 30 million jobs. Thus, the Government should consider trimming GST Rates.

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