FADA urges government to reduce GST on two-wheelers to increase demand

The Federation of Automobile Dealers Association (FADA) has requested the government to reduce the GST rates on two-wheelers by 18 per cent to stir demand in the segment. The automobile dealers’ body that represents over 15,000 automobile dealers having 26,500 dealerships, conveyed that since two-wheelers are not a luxury item, the GST rates need to come down.

The industry body said in a statement, “FADA requests the Ministry of Finance to regulate and reduce GST rates on two-wheelers to 18 per cent and continue to move our nation to global leadership." At a time, when the prices of vehicles are increasing every three to four months due to a hike in the input costs along with other factors, a reduction in the GST rate will help to bring the price down altogether resulting in an increase in the demand, added the body.

The association highlighted that two-wheelers are a necessity to cover distances, especially for people in rural areas for their daily work. “Hence the rationale of 28 per cent GST, 2 per cent cess which is for luxury/sin products does not hold good for the two-wheeler category," FADA added.

The body also stated that it believes the growth in demand for two-wheelers will create a ripple effect that will affect many dependent sectors leading to an increased tax collection. “In the mid to long-term it will actually be revenue positive and also help bring in positivity in the overall consumer sentiment and thereby the overall economy," it further said.

It also sought a uniform GST rate of 5 per cent on the margin for all used vehicles. The government currently charges GST on used cars at the rate of 12 and 18 per cent. “With the reduction in GST, it will help the industry to shift from unorganised segment to organised segment thus bringing in more business under the ambit of GST helping in putting a brake on tax leakages," FADA added.

(With inputs from PTI)