“I am not looking for any GST reduction or any other incentives or sops for the auto industry. Keep in mind that 28 percent (GST on two-wheelers) is nothing but VAT plus excise. So, why are we suddenly saying that we should have lower GST (on two-wheelers)? The country needs to have revenue. It is easy for us to say let’s have a lower GST,” said Goenka.
On the contrary, the top two-wheeler manufacturers have requested a reduction in the GST tax and argued that the 28 percent GST slab is for ‘luxury and sin goods’ and the two-wheelers cannot be placed amongst the luxury items, especially in the remote areas where a motorcycle is the only transport system connecting villages. The two-wheeler manufacturers requested a reduced GST in order to keep the demand constant and unchanged in effect of the price hikes.
Pawan Munjal, the Chairman and Managing Director of Hero Motocorp, Venu Srinivasan, chairman, TVS Motor Company and Rajiv Bajaj, the Managing Director of Bajaj Auto, have urged for a lower GST of 18 percent on two-wheelers. Honda too is there in support.
Read Also: Top Motorcycle Manufacturer Company Seeks Lower GST Slab Rate
With the recent launch of the Jawa range of retro-looking medium capacity motorcycles, Mahindra & Mahindra, apart from business in sports utility vehicles, electric cars and heavy trucks, have also entered the two-wheeler space.
A revised formula has been proposed by the association of two-wheeler makers regarding the GST reduction that tax rates should be reduced for not all two-wheelers, but a particular segment defined by the engine size. But, the industry has not yet come on a conclusion for what should be the cut-off size for engines to qualify for the lower GST rate.
“The view of the industry is that GST on two-wheelers of certain size should reduced to 18 percent and the balance can stay in 28 percent. It is because the 100cc bikes, which are budget bikes, are classified under the luxury goods segment of 28 percent,” YS Guleria, Senior Vice President, Sales and Marketing at Honda Motorcycle and Scooter India had told Moneycontrol.
The price band of Rs 30,000 to Rs 28 lakh (ex-showroom) has been set for the models having engines as small as 100cc and going up to 1800cc.
If the GST is further reduced for the small engine bikes, then the company which would be the most profiteering would be the Hero Motocorp, as it is the biggest dealer and manufacturer in this segment, while Eicher Motors, which controls Royal Enfield would be the one experiencing disadvantages as most of its bikes are of 350cc.
