GST rate cut on two-wheelers under consideration: FM

SCOOTERS AND BIKES MERIT TAX CUT AS THEY ARE NOT SIN GOODS, SITHARAMAN SAID

NEW DELHI: The government may consider lowering the Goods and Services Tax (GST) on two-wheelers from the highest slab of 28%. Union finance minister Nirmala Sitharaman said on Tuesday that scooters and motorcycles could not be characterised as either luxury or sin goods, and so merit a rate revision.

To a proposal to lower the GST rate on two-wheelers at a closed sitharaman meeting of the Confederation of Indian Industry (CII) through a video conference, Sitharaman responded by calling it “indeed a good suggestion as this category is neither a luxury nor a sin good,” according to a CII statement.

told the industry body that the matter will be taken up with the GST Council, which is the apex body on matters related to the indirect tax. The GST Council is chaired by the Union finance minister and finance ministers of states are its members. The council’s decisions are often unanimous.

A GST rate cut is under consideration to boost sagging automobile demand, but the Union finance ministry can only make a recommendation to the effect, a government official said on condition of anonymity. “Any decision in this regard will be taken by the GST Council,” the official added.

Sales of passenger vehicles dropped by about 4% in July from the corresponding month last year; sales of two-wheelers tumbled by 15.24% in the same month.

“It is not yet clear whether matters related to tax rationalisation would be taken up in the 41st meeting of the GST Council or in the 42nd meeting,” the official cited above said. The 41st meeting of the GST Council is scheduled on August 27 and the 42nd meeting on September 19.

A finance ministry official said, requesting anonymity, that the meeting on August 27 is expected to consider only one matter—how to pay compensation to states for their GST revenue shortfall. “It is likely that tax rate rationalisation matters would be taken up on September 19 along with various other reforms,” he said.