Exceeding the rate of 18 per cent may lead to new challenges, the implications of which will be far reaching.
The passage of GST Bill is expected to pave the way for yet another big economic reform in the history of India. It will take some time before the bill is turned into a law. An amount of deliberation will be necessary to arrive at a consensus on rates of various goods and services. Only then can the claim to provide relief to common citizens and small businessmen realise. Driven by small businessmen, the SME sector is estimated to account for 70-80 per cent of the country’s transportation needs. A panel under chief economic adviser has recommended a revenue-neutral rate of 15-15.5 per cent, with a standard rate of 17-18 per cent, levied on most goods and all services. Exceeding the rate of 18 per cent may lead to new challenges, the implications of which will be far reaching. If the CV manufacturers can look at realising their dream of streamlining operations and reducing operational costs, transporters can look at faster turnaround time and less taxes. In the wake of the regulatory changes like Euro 6, and challenges like ban on 10 year old diesel vehicles in the NCR region, the voluntary vehicle modernisation policy will prove to be useful. Its effectiveness will however depend on the amount of incentive offered. For the challenges posed, manufacturers may not find it worth pursuing diesel technology in India anymore. The costs may be simply prohibitive against the 10 year vehicle lifespan.