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Expect Huge Price Drop for Two-Wheelers if GST is Reduced to 18 Per Cent, Says Automakers

Image used for representation. (Photo: Manav Sinha/News18.com)

Image used for representation. (Photo: Manav Sinha/News18.com)

Currently, two-wheelers in India attract a GST of 28 per cent but that will be looked into by the GST council to see whether the tax rates need to be lowered, a move being welcomed by Indian automakers.

Earlier this week, Finance Minister Nirmala Sitharaman had said at an industry interaction that two-wheelers are neither a luxury nor sin goods and hence, merit a GST rate revision. Currently, two-wheelers like motorcycles, mopeds and cycles fitted with an auxiliary motor, fall under the highest tax bracket and attract 28 per cent GST.

The news of a possible revision of GST has been welcomed by the Indian automotive industry and they are hopeful that the taxes are lowered soon.

Sudarshan Venu, Joint Managing Director, TVS Motor Company said, “Post the slowdown due to Covid-19, the lowering of the GST rate at the earliest, will be a welcome move as it will facilitate the much-needed revival in demand ahead of the festive season. Further, in the era of social distancing, customers are looking for affordable personal mobility options and this reduction, if implemented, will make these options more accessible to them. Lowering of GST rates will also help the entire ecosystem of manufacturers, auto ancillaries to dealers, supply chain partners and related vendors.”

Rajiv Bajaj, Managing Director at Bajaj Auto said to CNBC-TV18 that reducing the GST to 18 per cent on two-wheelers could make them cheaper by up to Rs 10,000.

Bajaj said, “Lot of pain in the market has been aggravated with high GST rate. Prices of two-wheelers could reduce by Rs 8,000 to Rs 10,000 if the GST rate is lowered to 18 per cent.”

He added that the cost to the consumer needs to be brought down, saying, “Overregulation has led to a 30-35 per cent increase in prices for consumers and cost to the consumer needs to be brought down.”

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Last year, the country's largest two-wheeler maker Hero MotoCorp had urged the government to consider a phase-wise reduction in GST on the segment, starting with bringing motorcycles up to 150cc in engine capacity fall under the 18 per cent tax slab.

(With inputs from agencies)

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