Three of India’s leading two-wheeler manufacturers have appealed to the government to lower the goods and services tax (GST) rate on motorcycles and scooters from the current 28 per cent, contending that two-wheelers are not luxury goods, but provide basic mobility to the masses. The GST Council is scheduled to meet on January 10 to discuss lowering rates on certain items, and India’s leading two-wheeler manufacturers are hoping that a reduction in the GST rate will help offset an expected increase in two-wheeler prices when combined braking system (CBS) and anti-lock brakes (ABS) become mandatory from April 1, 2019. Moreover, with a switch to Bharat Stage VI (BS-VI) emission norms in 2020, costs of two-wheelers are expected to go up further.
The latest two-wheeler manufacturer to join the growing voices among manufacturers demanding a reduction in price is TVS Motor Company. In a statement, TVS Motor Company Chairman Venu Srinivasan said that two-wheelers are used for mass mobility, and it’s unfair for the GST rates on two-wheelers to be benchmarked against GST rates for luxury goods at 28 per cent. TVS Motor Company is the third Indian manufacturer after Hero MotoCorp and Bajaj Auto to have voiced concerns about the prevailing GST rates on two-wheelers.
“Rising urbanisation, increasing purchasing power and the enhanced need for connectivity particularly in the mid-sized and smaller cities across India, has fuelled the two wheeler revolution for personal mobility. 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. It has become even more imperative to relook at the GST rates for two wheelers to ensure social inclusion that is sustainable in the longer run,“ said Srinivasan.
Last week, India’s largest two-wheeler manufacturer Hero MotoCorp had also called for a reduction in GST rates on bikes and scooters to 18 per cent from the current rate of 28 per cent. In a statement, Hero MotoCorp said that the reduction in tax would provide much-needed relief to two-wheeler customers across the country. “Given that two-wheelers provide basic mobility to the masses, there is an urgent need to reduce the GST rate on two-wheelers from the 28 per cent bracket of ‘luxury goods’ to that of 18 per cent for mass usage items. The reduction in tax rate would not only help millions of two-wheeler customers, but also the entire value chain dependent on the sector. It is absolutely imperative to ensure growth in the auto sector to create and sustain inclusive economic growth. With the transition to BS VI emission norms, cost of two-wheelers will further go up. All these will put severe stress on the extremely cost-sensitive commuters, for whom the two-wheeler is a lifeline,” Hero MotoCorp Chairman Pawan Munjal said in a statement.
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