The Federation of Automobile Dealers Association (FADA) has sought a reduction in GST for two-wheelers and used cars to 18% and 5%, respectively to help spur demand.
“FADA requests the Ministry to regulate and reduce GST rates on two wheelers to 18%... two-wheeler is used not as a luxury but as a necessity to travel distances by lower class and rural segments for their daily working needs,” the industry body said in its recommendations submitted to the Finance Ministry for the upcoming Budget. “Hence the rationale of 28% GST + 2% cess which is for luxury/sin products does not hold good for the two-wheeler category,” it said.
It noted that at a time when vehicle prices are increasing after a gap of every 3-4 months due to a continuous increase in prices of metals, and other factors, a reduction in GST rate would counter the price hike and help spur demand.
“FADA believes that the growth in demand and the ripple effects it will have on many dependent sectors will increase the tax collections. In the mid to long-term it will actually be revenue positive and also help bring in positivity in the overall consumer sentiment and thereby the overall economy,” the federation added.
It also pitched for a reduction in GST rates for used cars to 5% from the current 12% for vehicles measuring 4,000 mm in length, and 18% for those measuring longer.
“The association requests for a uniform GST rate of 5% on the margin for all used vehicles, to create a win-win situation for the government, dealers, and vehicle owners. With the reduction in GST, it will help the industry to shift from unorganised segment to organised segment thus bringing in more business under the ambit of GST, helping in putting a brake on tax leakages.”
Noting that the government had reduced corporate tax to 25% for private limited companies with turnover of up to ₹400 crore, the industry body said that the same benefit should also be extended to all ‘LLP, Proprietary and Partnership’ firms as most traders within the auto dealership community fall in this category.