Luxury carmakers have been demanding to reduce the GST rates on vehicles ever since the GST council had increased the cess to 25 per cent. Rohit Suri, Head- Jaguar Land Rover India had recently appealed to stop classifying luxury cars as ‘sin goods’ and reduce GST on them. Other carmakers are also expecting the budget committee to reconsider revising the GST rates on all passenger vehicles measuring above four metres.
Martin Schwenk, MD & CEO, Mercedes-Benz India said that Government should reconsider the rationalization of GST rates for cars which currently attracts 28 per cent GST and 17- 22 per cent Compensation Cess. A downward revision of GST rate is recommended on all cars to 18 per cent from 28 per cent, and a proportionate reduction of CESS to around 15 per cent for all cars above 4 meters. He added that this will act as a catalyst for growth of the industry, especially when it is facing subdued customer interest due to multiple factors like rise in insurance costs, inflationary hikes, liquidity crunch and forthcoming price increase due to BSVI implementation. He stated that o revive the slowing down auto sector, offering ‘depreciation’ benefit on vehicles to individuals is also recommended.
Rahil Ansari, Head- Audi India said that moderation in taxes is needed as it will lead to more volume and create larger tax revenues for the government in the long run.
Luxury cars constitute just over 1 per cent of the total Indian auto market and companies have been finding it hard to push sales after the rates were increased. Reduced GST rates will also help with better return-on-investment (ROI), making the market more lucrative for world class carmakers. Carmakers will also find India more viable to introduce latest and advanced technologies as good ROI promises more profit on the revenue invested.
Source: https://auto.ndtv.com/news/budget-2019-luxury-carmakers-demand-reduction-in-gst-rates-2064273
