[anjan_c2007]

The demand by our auto industry to reduce GST to 18 % for all categories of motor vehicles is likely to be rejected, as we learnt from yesterday's news. The government's contention is that there will be a slew of such demands from other businesses to reduce GST on other categories of goods for various obvious reasons.

Rightfully so, because it's illogical to reduce the GST by 10% from 28 % to 18 % for all categories of motor vehicles. Had it been initially drafted as 18 % for all categories in the original GST document, it would have been smooth sailing.

Wondering as to what was the outcome of the other suggestions from the automobile manufacturers, component makers and dealers to the Finance Minister, through the Society of Indian Automobile Manufacturers, Auto Component Manufacturers Association (Acma) and Federation of Automobile Dealers Associations (FADA) two days ago ? They had asked for lower GST ( FM said that the GST Council will be asked to look into, but news percolating today affirms a negative reaction by policy makers), permission to sell BS IV vehicles even after April 1, 2020 ( govt said it is a Supreme Court order and the govt will have to abide by it wef 1/4/2020 ) , a favourable scrapping policy ( nothing is known other than the voluntary scrapping policy in the pipeline) , better availiability of affordable loans for customers ( the RBI had already lowered the repo rate by 0.35 % a few days ago), better treatment by banks to auto dealers for facilitating loans as they were being labelled as defaulters, were all among the important demands. A stimulus package was also discussed and more will be known after the three associations submit representations within a week, as has been told to them.

As some of the demand is affected obviously owing to the impending switchover to BS VI, it would have been advisable for auto makers to start rolling out BS VI vehicles immediately, well in advance as an option for customers, desiring to buy one. At least the uncertainity due to this nebulous factor will be contained.

[tj123]

Originally Posted by anjan_c2007

The demand by our auto industry to reduce GST to 18 % for all categories of motor vehicles is likely to be rejected, as we learnt from yesterday's news.

This news can probably trigger next round of sell off in auto stocks on Tuesday when the stock markets reopens. IMO Government should take a pragmatic view of the impact of the slow down which can spiral out of control. Government must understand that this is not a normal slow down phenomena there are multiple factors associated to it (anticipated EV disruption, BS6, rise of Ride hailing services, traffic congestion, high cost of ownership, parking woes, improved transportation due to metro etc.)

Slow down in auto sector is already dragging down upstream and down stream sectors like metals, electrical components, paints, vehicle finance sectors etc. The cumulative impact will cause a significant loss to the Indian economy and as per reports 2 lac jobs are already lost.

IMO a temporary tax incentive by the government will go a long way in propping up the sagging sales. A loss in GST revenue can always be made up by uptick in sales volumes. Keeping the economic engine going needs to be the mantra. Hopefully a prudent move can save a lot of pain for the people who are losing livelihood due to layoffs.

[superbad]

Originally Posted by K_Drive

IMHO instead of flat 28% GST, tax rate should be according to price cap.

Cars up to 5L - 10%
Cars up to 10L - 15%
Cars up to 15L - 20%
Anything above 28%

This will help middle class who opt for small family car.

You mean 5, 12 & 18 %, since there is no 10, 15 & 20 % slab.

[.HEM]

The main reason to keep GST at 28% is still the government thinks only rich can buy a car and so let them pay more tax, forgetting the fact that most cars are bought through loans.

At the end of the day it is we who lose more money in buying a car, we pay GST, Road Tax, Interest for loans and above all the income tax

[DigitalOne]

From the Finance Minister of Kerala, who belongs to the communist party of India, just reiterating the fact that Indirect taxes pre-GST (Excise + CST + VAT etc) was much more than now.

https://twitter.com/drthomasisaac/st...200575489?s=20

[gauravanekar]

I do not endorse reduction in GST because I believe that the auto sector is no Saint when it comes to reporting their actual profit. For a change why can't global majors forgo their royalty free from their Indian subsidiary? Why not send back non essential expats back to their home country and drive huge cost savings. Senior Indian management is good enough to run the businesses in most established company (new companies like mg, Kia etc. may not be able to do that).
There is lot of money to be saved if there is intent within the industry.
Also I get the feeling that there is a scope to reduce price of the cars by bringing out bare bones versions and asking dealers to relocate to more humble and less flashy premises.
Lots of metros, airports, railways, internal & external security, highway upgradations are going on so I donot fully agree with the opinion that our tax money is being floundered.

Three areas where govt can contribute is by pressuring the MPC to reduce the real interest rate, preload banks recapitalisation, disinvest with war footing

[K_Drive]

Originally Posted by superbad

You mean 5, 12 & 18 %, since there is no 10, 15 & 20 % slab.

Yeah, I just want to separate the tax slabs with respect to price cap so that lower middle class and middle class will get some benefits. If you own two cars, government can tax your second car the maximum (28%) irrespective of slabs and price caps.

[kaush666]

I am strongly in opposition of this request by the automobile companies for a plethora of reasons.

1) The cities are becoming congested and overcrowded with the cars that are plying on road already. A reduce in taxation (provided State / Manufacturers do not get greedy and equalise the potential reduction in cost by the requested decrease in GST) would mean that cars would become just THAT extra bit affordable, leading to our roads becoming even more congested.

2) The cost of cars have gone up significantly over the last few years. I’ve witnessed this firsthand over the last few years. Here are a couple of examples,

Example 1
In 2018 when I was looking for a new car the face-lifted Skoda Octavia Diesel AT top variant was one of my choices and cost close to 27L on road. Fast forward to July 2019 and the variants have been rebadged with a few new features added and suddenly the top variant of the same car (Diesel AT) is a whopping 33.5 lakhs on the road.

This applies to all the brands across the board and not just Skoda.

Example 2
I could buy a fully loaded Global Fiesta 1.5D For a shade over 11 lakhs in 2012. An equivalent car would set me back by no less than 15 to 16 lakhs today (Vento, Rapid, City etc). Heck, my Polo Highline was just over a lakh and a half cheaper than my erstwhile Fiesta and doesn’t even have half the space.

What’s even more appalling is that despite paying a premium for the same car that is sold cheaper in other countries, we get robbed of features, build quality, safety and what not!

Auto manufacturers in India should go back to their drawing board and mull over keeping costs down for the consumer rather than pressurising the government for the downfall that they brought upon themselves.

[nickatnite]

" Don't walk into debt. Buy a new car and drive into it". So true, especially in India, i think. , Unless you are smart and buy an used car.

[gauravanekar]

Originally Posted by nickatnite

" Don't walk into debt. Buy a new car and drive into it".

"Don't walk into debt. Buy a new car and drive into it or buy a home and live in it for eternity."

[tarik.arora]

Few of the factors that have dented sales is the increase in insurance premiums, inclusion of safety norms, and finally the upcoming BS-VI regulations. On a small petrol car, all these 3 combined can have an impact of about 5% of the purchase price. This is huge, considering the fact that all these 3 came in the same year (almost). GST reduction can help counter these and maintain demand.

IMO, GST reduction should not be given, even as a temporary measure. Once reduced, it will be impossible to increase it again. Also, i am not saying that government should not intervene. Auto sector contributes almost 50% to our manufacturing GDP and if this sector is impacted, the whole economy can suffer. Government should look at other ways to compensate for high taxes.

Tax subsidy on car loan interest can be one way (like they did for EVs). Most of our vehicle purchases are through loans and thus this move can have a positive impact on majority of the car buying population. Offering tax subsidy on annual maintenance costs can also be another way. The government should also look at keeping vehicle lease out of GST (or reduced GST) to make it more attractive. As we move towards mobility (from typical ownership model), vehicle Leasing should be made attractive.

[srini1785]

Going totally , how will it be if they keep GST the same and reduce our IT?.

Wont that not stimulate demand?. This has also been a long pending demand of urban middle class tax payers who are in a state of permanent recession.

That said , i believe that even if the govt does yield to this demand , it must come with strings attached like reduced GST applying only for exchange of an old smoky with newer more efficient one. GST Reduction only for family with one car etc.

[lurker]

People are not buying because economy is not booming as before, cash is tight and when resources and revenue get squeezed, other priorities take over and cars get relegated to back seat. It's as simple as that.

If cash flow were not a problem, 99% of potential market would not have bothered about BS6 or pollution norms or EVs and would have made merry with new cars.

Reducing taxes may definitely help here to bring back some demand as customer enquiries will begin to rise again, but not sure whether it will take demand back to pre-demonitisation and pre-gst levels.

[SaiSW]

Companies like Hyundai and Toyota make big fat profits from their popular products, so why don't they reduce the prices of the cars? That would have the same effect. There are many ways upon which they can save money relating to reorganisation of their company structuring, getting rid of sales flops and concentrating on ones that bring in volume ( ofcourse it's all relative, for example, Toyota should not ditch the fortuner because it "only" sells around 1500-1800 units pm )

It's interesting how some companies price their cars however they want and then have the audacity to whine about "increasing taxations". Despite all it's many shortcomings, I have to say that most of the Maruti products do not outright rob the customer in broad daylight, and are decently equipped, which is the reason why they have the lion's share of the market and will have so for the foreseeable future.

Tata and MG are also examples of companies which do not rob their customers and leave them for dead at the showroom.

[Elito11]

Lol! It won't make a difference. No one wants to buy these tin boxes even at 20-30,000 Rs less. I rather we put all our energy in the various mass urban transport projects. Middle class people wanna get to work/places in less than hour and for not more than 100-150 rs