FM hints at GST cut on two-wheelers

FM hints at GST cut on two-wheelers

Even as the government is battling a much-reduced tax buoyancy and a yawning revenue deficit, finance minister Nirmala Sitharaman on Tuesday kept alive industry’s hopes for further tax cuts. Responding to an observation made by attendees at a CII event, on the need for lowering the rate on two-wheelers, the minister said it was “indeed a good suggestion, as this category is neither a luxury nor a sin good and hence merits a rate revision”.

The remark came ahead of the 41st session of the Goods and Service Tax (GST) Council, slated for Thursday. There has been a demand from the automobile industry, including largest two-wheeler maker Hero MotoCorp for reduction of the GST rate on bikes and scooters to 18% from the top slab of 28% meant for luxury goods, in order to spur demand.

Two-wheeler sales somewhat recovered in July following the easing of lockdown curbs, signalling improving rural demand on the back of a good rabi harvest. Sales stood at 12,94,49 units, up 32% from the June volumes but is still down by 12% from a year before.

However, the current juncture appears to be not conducive for further rate cuts, as GST revenues are way below the targets