Home / Budget / Budget Expectations /  FADA wants 18% GST on two-wheelers, 5% on used vehicles in Union Budget

Federation of Automobile Dealers Association (FADA) has highlighted few issues to Union Finance Minister, Nirmala Sitharaman, which are hurting the growth of the Indian Automobile Industry and Auto Dealerships at large. The Association has bifurcated the recommendation into two different aspects Demand Revival Appeal and Dealer Issue. 

We urge the government if the concerns are accommodated in the upcoming budget this could reenergize the auto retail trade, which in turn will bring back the sector and the entire automobile industry back on track and the overall economic growth too, said FADA.

Demand Revival Appeal

FADA requests the Finance Ministry to allow individuals to account for depreciation. This will not only help in increasing the number of individuals filing their IT return but will also help in igniting automobile demand (especially Two-Wheeler) from individuals and will thus up the GST collection for the government. 

It requests for reintroduction of Depreciation Scheme which was valid only till 31st March’20 to be further extended for FY 2022-23.

To bring the Industry and Auto Retail Trade back on growth path, FADA requests the Ministry to regulate and reduce GST rates on two wheelers to 18%. It is noteworthy that the 2W is used not as a luxury but as a necessity to travel distances by lower class and rural segment for their daily working needs. Hence the rationale of 28% GST + 2% cess which is for luxury/sin products does not hold good for the two-wheeler category.

The rate of GST on used cars is currently 12% and 18%. 12% for vehicles which are sub 4000 mm and 18% for vehicles above 4,000 mm. The Association therefore requests for a uniform GST rate of 5% on the margin for all used vehicles.


The government has reduced corporate tax to 25% for private limited companies with turnover of up to 400 crores. The same benefit should also be extended to all LLP, Proprietary and Partnership firms as most traders within the auto dealership community fall in this category. This will help boost morale and sentiment of the traders which employ 5 million people, out of which 2.5 million employees are on direct employment. 

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