Parliamentary Panel Proposed a Cut in GST Rates for Automobile Sector

On Tuesday, 3rd March 2020, a parliamentary panel proposed a reduction in GST rates for the Automobile Sector of the country. It recommended that the GST rates imposed should be reduced at least until the Automobile Sector revives in full. It also said that uniform road taxes What is One Nation One Road Tax? One Nation One Road Tax is a proposal from GST council to make one road tax across the country just like the Goods and services should be implied throughout all the states and union territories of the country. The panel said that this will work to fight against the negative growth in the total production of automobiles since July 2018.

Department of Heavy Industry (DHI)’s Demands for Grants 2020-21 was deeply studied by the panel and then it came up with the solutions in its report submitted to the Parliament. The Automobile Industry constitutes 27 percent Industrial Growth Domestic Product (GDP) The biggest tax reform i.e. Goods and Services Tax is now a part of Indian Economy. A new and unified tax structure is followed for indirect taxation and 49 percent of manufacturing GDP. It is one of the fastest-growing sectors in the country, providing 3.7 crore direct and indirect jobs to the unemployed. The total GST collections from the Automobile Sector amounts to a total of INR 1,50,000 crores, which is 15 percent of the total GDP collections of the country.

“But, the committee observes that of late, there is negative growth in the automobile production since July 2018,” said the panel’s report.

The panel stated that factors like strict rules for loan sanctions by banks, ineffective credit facility to customers, launching of BS-VI, rise in price due to 5 yr insurance rule, high GST rates As per the recent update, The central government is planning to do changes in the slabs of Goods and Service Taxes (GSTs) soon. As per the rumors, etc resulted in the downfall of growth rate in the automobile sector.

Among other suggestions, the panel also asked to hold the policy of “Upfront Payment of Insurance for 5 Years” for the time being. The panel suggested introducing an incentive-based scrappage policy for increasing the demands of New Vehicles. Additionally, it asked the parliament to reduce the import-duty on Lithium-ion Batteries used in e-vehicles.

The panel was pleased to inform you that the Delhi-Chandigarh Highway is declared as the First E-Vehicle Friendly Highway. It said that other important and busy highways like Delhi-Jaipur Highway, Mumbai-Pune Highway, etc. should also be made e-vehicle compatible with frequent charging places.