GST Council meet: Hero MotoCorp urges phase-wise tax discount; seeks early price reduce for 2-wheelers
New Delhi: Hero MotoCorp on Thursday urged the federal government to think about a phase-wise discount in GST on vehicles, slicing charges for two-wheelers within the first stage, and deferring tax reduce on four-wheelers to a later stage.
The nation’s largest two-wheeler maker stated the transfer would assist the federal government comprise potential income loss, and on the identical time present aid to round 20 million possible two-wheeler consumers throughout the nation.
“I understand that potential adverse impact on government revenue is becoming a constraint (for GST rate cut). While increased sales should take care of that, even if we assume a shortfall in revenue, a resolution can be found if we approach this topic in phases,” Hero MotoCorp CFO Niranjan Gupta advised PTI.
The federal government might take a look at decreasing the GST for less than two-wheelers as step one and defer it for four-wheelers, he added.
“This will contain the potential revenue loss, and also cover around 20 million buyers,” Gupta stated.
To start with, the federal government may even take a look at bringing two-wheelers as much as 150 cc into the 18 % items and companies tax (GST) slab, he stated, including that this may present aid to virtually 16 million possible prospects – principally in small cities and rural areas – with minimal income influence.
“Thereafter, the same can be extended to other segments, basis the outcome and fiscal space that the government may have,” Gupta stated.
The 2-wheeler market in India is pegged at round 20 million items per 12 months with decrease than 150-cc bikes accounting for the majority of gross sales.
Gupta stated that the corporate, for a while now, has been declaring that two-wheelers under 150 cc are positively not gadgets of luxurious or sin items.
“They are drivers of the economy, especially in the heart of the nation, in tier II, III cities and villages. They not only provide mobility to millions, but also make them employable and support small businesses. Thus, it is unfair to club them under the same category as four-wheelers or expensive motorcycles,” Gupta stated.
Therefore, the GST council must have a separate slab for two-wheelers under 150 cc class at 18 %, he added.
“This is basis end-use, and not overall segmentation,” Gupta stated.
When requested if the GST price reduce ought to come now or near BS-VI transition, he stated: “We believe that it needs to be an immediate step, as it will help in boosting the sentiment right now and increase sales, and also help insulate the BS-VI impact.”
The present slowdown within the trade is because of a major worth improve by way of a number of insurance policies and structural adjustments over the previous couple of years. This, together with different elements corresponding to liquidity crunch, low financial sentiments, decreased rural incomes, has put a cumulative influence on gross sales, Gupta stated.
“Therefore, the need is for an immediate respite, at least for the economic enablers, like two-wheelers up to 150 cc segment,” he added.
It’s prudent to behave now with a booster shot (GST price reduce), reasonably than look forward to pure cyclical restoration, as a result of the domino impact of extended auto trade slowdown might result in a widespread influence on the general financial system, Gupta famous.
Going through an unprecedented droop in gross sales, the auto trade has lengthy been demanding a discount in GST price from the current 28 % to 18 %.
The GST Council, headed by Finance Minister Nirmala Sitharaman and comprising representatives of all states and union territories, is scheduled to fulfill on 20 September in Goa.