Two-Wheelers Become Cheaper
The possible reduction in the Goods and Services Tax rate is expected to lead to a huge increase in demand in the Indian automobile industry. The proposed rate change is likely to be announced next month.
Two-wheelers and small passenger vehicles are likely to benefit the most after the announcement. This has been claimed by international agency Jefferies. According to the report, the GST rate cut will reduce the tax slab for most vehicles from 28 percent to 18 percent and for tractors from 12 percent to 5 percent. This will reduce the cost of vehicles by 6 to 8%. This will significantly improve the affordability of the automobile market and will also increase demand. Two-wheelers, which are currently taxed at 28-31 percent, and cars under 4 meters, which are taxed at around 29-31 percent, are expected to benefit the most. Large SUVs, which currently attract a tax of 45-50 per cent, may also get some relief and experts estimate that the effective rate could come down to 40 per cent.
Demand in the auto industry has been subdued in the last few months, with two-wheeler and passenger vehicle registrations growing by only 2-3 per cent year-on-year in April-July. However, it is expected that the income tax cut, easing of cash flow and possible GST cut will help consumers during the festive season.
The possible reduction in GST rates will benefit the automobile sector.
The proposed rate change is likely to be announced next month.
The prices of two-wheelers and small passenger vehicles are expected to come down.
The tax slab will be reduced from 28 percent to 18 percent and from 12 percent to 5 percent.
The price of vehicles will fall by 6 to 8 percent.
ALSO READ : 12th fail quotes in hindi
