Two-wheeler prices will go down by Rs 10,000 if GST rates reduced, boosting its sale: states auto industry; FM mulls on tax cut

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Mrunal Jadhav

New Delhi, August 27, 2020: Two-wheeler like bikes and mopeds prices are likely to reduce by Rs 10,000. The central government is mulling upon reducing the Goods and Service Tax (GST) levied on two-wheeler vehicles. The Union Finance Minister Nirmala Sitharaman also hinted at a possible reduction in GST rates on bikes and scooters.

 

“The two-wheeler prices can come down by Rs 10,000 if the central government reduces the GST rate from 28 percent to 18 percent, said Rajiv Bajaj, managing director of Bajaj Auto.

The FM has stated that the GST Council is likely to review the tax imposed on two-wheelers. The auto industry has been in a state of turbulence for the past year, and with the addition of the coronavirus outbreak, it has got worseThe auto industry also requested at the GST Council meeting to decrease the GST rate, hence it will be discussed, assured Sitharaman in a meeting with the Confederation of Indian Industry (CII). Bajaj pointed out that the auto industry has been facing several problems over a year now. The reduction in GST rates will bring relief to consumers and the automobile industry, he stated.

Two-wheeler is not a luxury item
Sitharaman welcomed the proposal to reduce GST on two-wheelers, stating it was a good one. Two-wheelers do not break into luxury items. At present, 28 percent GST is levied on two-wheelers. Hero MotoCorp, the country’s largest two-wheeler company, had also demanded a reduction in the GST rate on two-wheeler sales last year. It is expected that the GST will be reduced by 18 percent on 150cc motorcycles.

Vehicle shares will increase
Shares of auto companies increased after the FM’s clarification that stated two-wheelers doesn’t fall in luxury items on Wednesday. Therefore the share of TVS Motor Company increased by 6.96 percent, Hero MotoCorp 5.17 percent and Bajaj Auto 4.22 percent. It was followed by Tata Motors at 3.89 percent, Eicher Motors at 3 percent, Mahindra & Mahindra at 2.60 percent and Ashok Leyland at 1.35 percent. The BSE Auto Index also went up by 1.51 percent to 18,280.89.