Two wheeler companies are seeking a reduction in the GST slab to distinguish between an item of mass mobility and luxury goods. Auto bosses in the segment including TVS chairman Venu Srinivasan and Hero Motocorp chairman Pawan Munjal say that two wheelers are an item of mass mobility ,extremely price sensitive and 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.
The segment is already facing pricing pressure on account of the new insurance slabs as well as the impending BS6 norms.
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Pawan Munjal, chairman, Hero MotoCorp, said that two-wheelers provide basic mobility to the commuting masses, hence there is a need to reduce the GST rate on two-wheelers from the 28% bracket of ‘luxury goods’ to that of 18% for mass usage items which will provide the relief to millions of two-wheeler customers across the country, as well as the entire value chain dependent on the sector. He said that it is imperative to ensure growth in the auto sector to create and sustain inclusive economic growth.
The two-wheeler industry is already facing serious headwinds due to poor consumer sentiment, price pressure due to insurance, fuel price hikes, safety and other norms and a liquidity crisis in the market following IL&FS scam. The festival season has seen extremely lacklustre demand and although some rural markets have shown growth, others are still not picking up speed.
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Tyre companies have also been pressing for a GST revision.Late last month, the GST council had revised rates on 23 commonly used goods and services and rationalized the 28% slab by cutting the tax on 7 items in the highest tax slab.
