Finance Minister has confirmed a possible GST cut on cars and two-wheelers soon, which could easily take down the prices of the automobiles by a margin.
Amidst the slowdown in the automotive sector, automakers are rooting for some help from the government to improve the situation. Late last month, the Finance Ministry put forward some measures to boost the demand.
On 1st September, Finance Minister, Nirmala Sitharaman has put forward the request of lowering GST rates on automobiles, with the GST council. As of now, automobiles attract a tax rate of 28%, which is the reason for the high difference between the ex-showroom and on-road prices.
The FM also says that their ministry is taking steps to improve the condition of the auto sector. On August 23, certain schemes were introduced in aid:
- Increase in the depreciation cost of automobiles purchased till March 2020 up to 30%
- Removal of ban on government departments to purchase new vehicles
- Deferment of one-time registration fee up to June 2020.
Also Read: Finance Minister Announces Several Measures to Revive Automobile Industry Slowdown!
The reduction in the tax rates will make the prices to go down, which will, in turn, increase the demand for automobiles. The auto sector could cash in on this, because of the upcoming festive season.
Automakers have complained that all the benefits are given only for electric vehicles, instead of easing out the problems due to this slowdown. To which, the FM has stated that solutions for both types of vehicles will exist alongside.
Again, with the upcoming BS-6 norms, automakers are finding it tough to keep up with the slowdown as well as the oncoming regulations. The BS-6 engines will take up the prices of cars as well as two-wheelers by a considerable margin.
As of now, automakers are planning to make a relief sales report in this festive season, where usually people tend to buy new cars and two-wheelers. Heavy discounts and offers are being put up by different manufacturers for the same.
