GST rates: Auto sector in need of tax relief now

For quite some time, the automobile industry has been demanding a GST rate cut on vehicles — the total tax, including compensation cess, can go as high as 50% in the case of a certain class of cars — to boost demand. However, the government has instead asked them to take cost-cutting measures such as reducing royalty payments to their parent companies abroad.

The closest the government came to hinting at the possibility of any GST cut was the recent statement by finance minister Nirmala Sitharaman that there is a case for reduction of GST rate on two-wheelers as these are neither a sin good nor luxury. It must be noted that the pandemic has forced a large section of middle or lower income group of population to use two-wheelers over public transportation, and two-wheelers are currently taxed at 28%.

The full article was originally published on Financial Express