Two-wheelers neither luxury nor sin goods, merit GST rate revision, says FM

In what could be a big push to make two-wheeler vehicles cheaper and might boost the demand, the government is considering whether the goods and services tax (GST) rates can be cut for this segment.

Extending hope for the industry and the consumers, while responding to a question at a CII forum about the need for lowering GST rates on 2-wheelers, Finance Minister Nirmala Sitharaman said, “this was indeed a good suggestion as this category is neither a luxury nor a sin good and hence merits a rate revision. Consequently, this will be taken up with the GST Council.”

Meanwhile, when CNBC-TV18 checked with sources about how soon the proposal can be taken up with the GST Council, they told that “the proposal of GST rate revision for 2-wheelers will have to be sent to the GST fitment committee and is not likely to be taken up immediately”

The immediate GST Council meet is on August 27, which will be only on a single point agenda to iron out measures to raise funds to meet the compensation payout to states.

Though the next full agenda council meet is planned on September 19, but for the Council to discuss this proposal, “the fitment committee will have to make its recommendations on the proposal and it will be a final call of the council, whether to revise rates or not,” sources added.

Currently, two-wheelers attract 28 percent GST and those above 350cc attract an additional cess of 3 percent over and above the 28 percent GST rate. The industry has been demanding for a rate reduction, especially for the segment below 150cc, but the Council has still not taken up this issue. Let’s see whether this is taken up this time in the September meeting or is slated for later.