Two wheeler firms seek GST reduction

Chennai: Two wheeler companies are seeking a reduction in the GST slab to distinguish between an item of mass mobility and luxury goods. Currently two wheelers are clubbed along with luxury goods in the highest GST slab of 28%. Although auto bosses in the segment including TVS chairman Venu Srinivasan and Hero Motocorp chairman Pawan Munjal have been vocal about this discrepancy, so far the GST council has not changed the rates.
Auto bosses say two wheelers are an item of mass mobility and therefore extremely price sensitive.The segment is already facing pricing pressure on account of the new insurance slabs as well as the impending BS6 norms. “Given the importance of the two-wheeler segment as an item for mass mobility, the GST rates for two-wheelers undoubtedly needs to be reconsidered. It certainly cannot be benchmarked against the prevalent GST rates for luxury goods at 28%, especially given the current state of inconsistencies with the integrated multi-modal public transport systems across India. More so with new safety norms and BSVI integration also around the corner, both of which will increase two-wheeler prices,” said Venu Srinivasan, chairman, TVS Motor Company.
Two wheeler companies say a revisit of the GST slab will also help the entire value chain dependent on the sector. “Given that two-wheelers provide basic mobility to the commuting masses, there is a need to reduce the GST rate on two-wheelers from the 28% bracket of ‘luxury goods’ to that of 18% for mass usage items. This will provide the much-needed relief to millions of two-wheeler customers across the country, as well as the entire value chain dependent on the sector. It is imperative to ensure growth in the auto sector to create and sustain inclusive economic growth,” said Pawan Munjal, chairman, Hero MotoCorp.
The two-wheeler industry is already facing serious headwinds thanks to poor consumer sentiment, price pressure due to insurance, fuel price hikes, safety and other norms and a liquidity crisis in the market following IL&FS scam. The festival season has seen extremely lacklustre demand and although some rural markets have shown growth, others are still not picking up speed.
Two wheelers aren’t the only auto segment seeking a revision in GST slab. Tyre companies have also been pressing for a GST revision though the latest GST council meet has not seen any action on that count either. Late last month, the GST council had revised rates on 23 commonly used goods and services and rationalized the 28% slab by cutting the tax on 7 items in the highest tax slab.