Siam urges govt to reduce GST on cars, bikes to 18%

New Delhi: Society of Indian Automobile Manufacturers (Siam), on Monday appealed to the government to cut goods and services tax (GST) on cars and scooters and bikes from 28% to 18% to ease the incoming pricing pressure on the automobile industry.

Automobiles, cars and two-wheelers alike, are expected to cost 10-15% more from 1 April 2020, when Bharat Stage VI (BS-VI) emission norms and new safety regulations are expected to kick in. The industry fears that with the increase in prices, the demand for their products would be impacted.

Cars, bikes and scooters at present attract peak GST rate of 28% with additional cess ranging from 1% to 15%, depending on the length, engine size and type.

"We want the government to be sensitive to the fact that BS-VI emission introduction (from 1 Apri1 2020) and other safety regulations will add to the cost. If it adds to the cost it is likely to lead to slowdown in the demand," Siam president Rajan Wadhera said.

If the demand goes down, government collection of taxes would also go down, he said.

"Therefore, for a win-win situation, we are seeking a 18% GST on automobiles."

A price hike of even 10% would impact the sales of two-wheeler segment, which currently witnesses offtake of over 22 million units annually, Wadhera said.

"On passenger vehicles also, the prices are going to go up in the range of 10-15% due to technology and safety enhancements. There also we need serious considerations by government so that it is a win-win situation for all," Wadhera said.

Earlier this year, Maruti Suzuki India Ltd's managing director and chief executive officer, Kenichi Ayukawa, had sought GST cut on cars in order to create demand and develop the industry.

Major two-wheeler companies like TVS Motor Co., Hero MotoCorp Ltd and Bajaj Auto had also demanded a GST rate cut on two-wheelers.