Reduce GST on CNG and flex fuel two wheelers – Auto industry to new NDA govt
Sources say an auto industry body has written to the Ministry of Heavy Industries with a request to consider an 18-12% GST slab for flex-fuel and CNG two-wheelers. The request is based on the rationale that a lower GST rate will allow greater adoption of low-carbon two-wheelers and reduce overall vehicular emissions.
India’s automobile industry has requested the Ministry of Heavy Industries to consider reducing the GST on low-carbon two-wheelers. Currently, there is a 28% uniform GST rate for all two-wheelers.
Sources say an auto industry body has written to the Ministry of Heavy Industries with a request to consider an 18-12% GST slab for flex-fuel and CNG two-wheelers. The request is based on the rationale that a lower GST rate will allow greater adoption of low-carbon two-wheelers and reduce overall vehicular emissions.
CNG is a popular fuel for buses, three-wheelers, and passenger cars, and auto companies are in the process of developing and launching CNG two-wheelers. Flex-fuel vehicles are those which can run on higher blends of ethanol up to 85%.
Industry sources told CNBC-TV18 that two-wheelers play a major role in increasing productivity across various sectors of the economy, including e-commerce and quick commerce. According to Euromonitor, India has 197 two-wheelers per 1000 people, whereas Thailand has an adoption rate of 371 per 1000, and Indonesia has 536 two-wheelers for every 1000 people.
The industry body has said a high GST rate, 15-year upfront road tax, 5-year upfront third-party insurance cost have led to a high cost of acquisition and lower penetration compared to other South Asian economies. While India has a 28% GST rate and a 3% cess for two-wheelers above 350cc, countries like Thailand and Indonesia have a 7% and 11% rate, respectively.
One of the long-standing requests of the auto sector has been for the reduction of GST on all two-wheelers from 28% to 18% and the removal of cess for all vehicles above 350cc. Two-wheeler makers have previously urged the government to bring the GST on hydrogen two-wheelers down from 12% to 5% in line with electric vehicles.
The industry body has now requested the Ministry of Heavy Industries to consider reducing GST on flex-fuel and CNG two-wheelers to 18% until the time the base rate for all two-wheelers is 28% and further bring it down to 12% once the base rate for two-wheelers becomes 18%. The industry has also requested the removal of 3% cess on all categories of two-wheelers.
Industry executives say that designing and developing CNG and flex-fuel vehicles requires significant investment and without a lower GST rate, the price of the product may not be attractive for a customer.
The Ministry of Heavy Industries is yet to consider the request. It is also important to note that while the Ministry of Heavy Industries can technically send a proposal to the finance ministry, any decision on GST reduction can only be taken by the GST council.
Sources say an auto industry body has written to the Ministry of Heavy Industries with a request to consider an 18-12% GST slab for flex-fuel and CNG two-wheelers. The request is based on the rationale that a lower GST rate will allow greater adoption of low-carbon two-wheelers and reduce overall vehicular emissions.
CNG is a popular fuel for buses, three-wheelers, and passenger cars, and auto companies are in the process of developing and launching CNG two-wheelers. Flex-fuel vehicles are those which can run on higher blends of ethanol up to 85%.
Industry sources told CNBC-TV18 that two-wheelers play a major role in increasing productivity across various sectors of the economy, including e-commerce and quick commerce. According to Euromonitor, India has 197 two-wheelers per 1000 people, whereas Thailand has an adoption rate of 371 per 1000, and Indonesia has 536 two-wheelers for every 1000 people.
The industry body has said a high GST rate, 15-year upfront road tax, 5-year upfront third-party insurance cost have led to a high cost of acquisition and lower penetration compared to other South Asian economies. While India has a 28% GST rate and a 3% cess for two-wheelers above 350cc, countries like Thailand and Indonesia have a 7% and 11% rate, respectively.
One of the long-standing requests of the auto sector has been for the reduction of GST on all two-wheelers from 28% to 18% and the removal of cess for all vehicles above 350cc. Two-wheeler makers have previously urged the government to bring the GST on hydrogen two-wheelers down from 12% to 5% in line with electric vehicles.
The industry body has now requested the Ministry of Heavy Industries to consider reducing GST on flex-fuel and CNG two-wheelers to 18% until the time the base rate for all two-wheelers is 28% and further bring it down to 12% once the base rate for two-wheelers becomes 18%. The industry has also requested the removal of 3% cess on all categories of two-wheelers.
Industry executives say that designing and developing CNG and flex-fuel vehicles requires significant investment and without a lower GST rate, the price of the product may not be attractive for a customer.
The Ministry of Heavy Industries is yet to consider the request. It is also important to note that while the Ministry of Heavy Industries can technically send a proposal to the finance ministry, any decision on GST reduction can only be taken by the GST council.
(Edited by : SonalMohan Jadhav)
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