Bicycles, scooters are not goodies or luxuries, says FADA, seeks to reduce GST rates

Automobile dealers’ association FADA on Thursday sought to cut GST on two-wheelers to 18 percent from 28 percent, saying the segment is vital to millions of people and should not be classified as a luxury. The industry body said it had appealed to the finance minister, GST committee chairman, all GST committee members, the Ministry of Heavy Industries, which oversees the auto industry, and the Ministry of Road Transport and Highways.

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Updated on:
May 18, 2023 at 18:02 pm

Indian car dealer groups are seeking to reduce the GST rate on two-wheelers, proposing an 18% tax. (MINT_PRINT)

The Federation of Automobile Dealers Associations (FADA) said in a statement that this timely and decisive intervention would help make two-wheelers more affordable, boosting demand and reviving a situation where sales have fallen sharply over the past few years. industry. “The two-wheeler industry is at a pivotal time and is dealing with unprecedented challenges such as rising inflation, stringent emission standards and post-Covid-19 impact. Now it is time for the GST Council to reduce the GST rate for two-wheelers It is a good time to make them more accessible to ordinary people,” FADA Chairman Manish Raj Singhania said in a statement.

He added that the tax cut would give the industry a much-needed boost, help create jobs and boost India’s overall economic growth. The industry body said two-wheelers play a key role in providing affordable transport to a large portion of India’s population, especially in rural areas where public transport is sparse. “FADA strongly contends that two-wheelers are essential to millions of people and should not be classified as sin goods or luxuries for excise tax purposes,” it said.

FADA pointed out that in the past few years, the prices of various two-wheelers have increased significantly, affecting the purchasing power of consumers. The surge in prices can be attributed to a variety of factors, including rising raw material costs, stricter emission standards and higher taxes and levies, the report said.As an example, it said the price of the popular Honda Activa had changed from ¥2016 52,000 to ¥88,000 by 2023.Similarly, prices for Bajaj Pulsar range from ¥2016 72,000 to ¥150,000 this year.

“Continued increase in prices of two-wheelers has led to a drop in sales, emphasizing the urgent need for intervention and reduction of GST rates to restore the industry’s growth trajectory,” FADA said. Two-wheelers accounted for 78% of total vehicle sales in India in 2016. However, this contribution fell to 72% in FY23 due to continued price increases since 2020, underscoring the impact of sharp price increases, FADA said. “A reduction in the GST rate will increase the competitiveness of two-wheelers compared to other modes of transport, thereby increasing the sales and revenue of the industry,” it added.

First published date: May 18, 2023 at 18:02 PM CST

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