Yesterday on Sept 4, the Union minister of Heavy Industries and Public Enterprises Prakash Javadekar assured that the government is looking into a decision on lowering GST rates for the automobile industry.
This comes after a long-standing request from such automobile manufacturers and companies, whose sales have gigantically been hit among the Covid-19 pandemic.
It must also be noted here that the pandemic has nothing but added on to the already poorly hit demand and sales graph, on which the automobile industry of India have been treading on for the past 9 consecutive quarters.
Central Govt Could Cut GST Rates by 10%
The Society of Indian Automobile Manufacturers (SIAM) held its 60th Annual Convention on Friday.
It was attended by the Union minister of Heavy Industries and Public Enterprises Prakash Javadekar, along with personnel from different automobile companies and segments.
Kenichi Ayukawa, managing director and chief executive officer, Maruti Suzuki India Ltd said that the only way India’s automobile industry could revive consumer sentiment and sales in such a thrashed economy would be for the government to make vehicles more affordable by cutting taxes on them.
“We will eagerly wait for the GST reduction and scrappage scheme. We believe that the taxes on the increased turnover will be more than the government’s expenditure on this scrappage scheme or GST rate reduction.”
Not just him but all inputs from different stakeholders have been diligently noted by the government, says Javdekar.
To this, Javdekar commented that the central government is working on the industry’s recommendation to reduce GST rates by 10% across all vehicle categories.
He also assures that currently the issue is under discussion with the Finance Minister once a decision is finalized, an announcement shall be made accordingly.
Why is the GST Rate Cut Necessary?
The coronavirus pandemic has severely hit the sales of the automobile industry, when it was already going through sluggish demands.
Rajan Wadhera, the President of SIAM indicated that:
- The passenger vehicle segment witnessed the longest slowdown in the past two decades spanning nine quarters.
- Commercial vehicles faced the second-longest slowdown in the last 15 years, spanning five quarters.
- The two-wheelers segment also witnessed consistent slowdown for six straight quarters.
Despite there being a slight increase in the demand of passenger vehicles recorded in August, the revenue generated is not significant enough.
Source: Livemint
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