Government may Reduce GST on Automobiles to Boost Sales

Government may Reduce GST on Automobiles to Boost Sales

Revenue Secretary Tarun Bajaj on 25th August, 2021, has informed that the Government is ready to discuss a change in Goods and Services Tax (GST) rates on automobiles, keeping in view several remarks from automakers to lower taxes.

The current GST rate on automobiles, including cars, motorbikes and trucks is at 28 percent, higher than the other taxes imposed by states. While, Auto companies have for years lobbied for lower GST tax rates, which they say could help boost sales.

Automobile executives claim higher tax rate is making vehicles unaffordable for many buyers, especially as high raw material prices and upgrades to meet tougher safety and emission rules have already boosted prices.

“We have been going through a situation where this industry has been declining over a long period of time,” Bhargava, Chairman of Maruti Suzuki India, said. Similar view expressed by Venu Srinivasan, TVS Motor Company Chairman, “a two-wheeler, which is the basic mode of transportation for the country,’ is being taxed at 28 per cent GST, the highest and at a level equal to that of a luxury product.”

However, Bajaj said he wanted to better understand from automakers why vehicle sales have been tepid over the last few years and whether it was just due to high taxes or other reasons, and what could be done to revive a sector which the government considers key to helping it meet growth targets.

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