Auto firms should also take up GST rate cut demand with State FMs, says Anurag Thakur

Anurag Thakur. File  

Stating that the central government was willing to put forth the auto industry’s demand for a rate cut at the upcoming meeting of the GST Council, Minister of State for Finance Anurag Thakur asked the sector to also take up the matter with the States, who together have the majority vote in the Council.

“We have received representations  from carmakers, dealers and other stakeholders regarding GST rate cut from 28% to 18%,” Mr. Thakur said at the 59th Convention of Automotive Components Manufacturers Association of India (ACMA). He added that any GST rate cut needed  to be first approved by the GST Fitment Committee, post which it would be taken up by the Council. “I request all of you  to reach out to the  State Finance Ministers who are part of the GST Council... FM [Union Finance Minister] has already suggested that we are open to take it to the  Council.”

The next meeting of the GST Council will  take place on September 20. However, the auto industry is seeking an earlier resolution, as it fears that buyers will postpone purchases in anticipation of a reduction in prices.

Mr. Thakur said: “If there is reduction in interest rate after RBI’s announcement, you [the industry] are also giving discounts, many other initiatives taken by the central government... why are we still not seeing the same kind of demand?... is it only the global demand or is demand coming down locally? Are people looking for  cabs or for newer BS VI vehicles and electric vehicles?  Or is it cyclical?”

A member of the audience interrupted the junior Minister and said that this was due to the delayed effect of demonetisation and that people don’t have money to spend.

Mr Thakur responded, saying, “Thank you... If that is the delayed effect... How do you move forward?”

Speaking at the session, Union Minister Arjun Ram Meghwal said the problems faced by the auto industry were “minor” and would be quickly resolved.

‘Need uniform 18% GST’

The ACMA pitched for a uniform GST rate of 18% for all auto components as well as some export incentives for the industry from the Centre. Assocation president Ram Venkataramani said that about 60% of auto components attract 18% duty and the remaining high-value parts are taxed at 28%.

Citing a survey, he said there were indications that in Q1 of FY20, firms with diversified portfolios, be it across vehicle segments, market segments, product groups or different geographies, have performed better than others.

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Printable version | Sep 17, 2021 2:44:27 AM |

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