GST cut on cars unlikely, as states oppose the move

The GST Council is unlikely to offer any rate cuts on the passenger vehicles on its meeting next on Friday, as states seem to be opposing the move due to disappointing revenue growth.

“It’s for the GST Council to decide but I spoke to more than a dozen state finance ministers. No state is ready to give any concession to the auto sector and the biscuit industry or any industry which has a huge tax implication,” Bihar Deputy Chief Minister, Sushil Kumar Modi, who also sits of the GST Council said here in Bengaluru.

Earlier last week, the centre had put the ball in the court of states, when Minister of State for finance, Anurag Thakur has told auto manufacturers that the Centre is fine with slashing the GST rates on the automobiles, but the carmakers should also talk to states. The automakers have long been demanding a reduction in GST rates, as according to them, it has been adding to their transaction costs.

The passenger vehicles in India fall in the 28% tax bracket. However, many of them attract a cess. It is because of this cess that many cars attract tax in excess of 40% as well.

He alleged that it will happen because the growth of revenue in the country isn’t up to the mark.

“Until and unless the revenue stabilises, neither state nor the Centre will forego its revenue,” he added.