Finance Minister Piyush Goyal provided no relief on goods and services tax (GST) to automobile companies, disappointing two-wheeler companies categorised under the luxury and sin goods segment.
In January, two of India’s top four two-wheeler makers sought relief from the government to move two-wheelers to the 18 percent GST slab from 28 percent.Hero Motocorp Chairman Pawan Munjal and TVS Motor Company Venu Srinivasan had suggested two-wheelers be moved to the more affordable tax bracket. Rajiv Bajaj, MD, Bajaj Auto who had supported the call for a tax cut said it was important to time the tax cut as well.
Also Read :Â Two wheeler firms seek GST reduction
Two-wheelers are taxed in the same bracket (labelled as luxury and sin goods segment by the government) as mini cars, even though the consumer base is significantly larger with sales of more than 21 million units a year.
The Hero MotoCorp chairman argued the cost-sensitive buyer depends on the two-wheeler as a lifeline and a sharp increase in the prices of two-wheelers following the new set of safety and emission regulations will be detrimental to the industry.
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The two-wheeler industry will brace for more than one upward revision in price over the next 15 months. These will be as a result of the new safety norms from April 1 this year and the new emission standard norms from April 1, 2020. A combination of these will likely result in an increase of a minimum of Rs 8,000 (almost 20 percent jump) in prices of budget (100cc) two-wheelers.
