Two-wheeler firms step up demand for GST reduction

The fact that prices of two-wheelers are expected to increase post the implementation of the new safety and emission norms lends urgency to the demand for a rate cut from 28% to 18%.

The chorus calling for reduction in the GST rate on two-wheelers from the highest 28% bracket to the 18% rate for mass usage items has been getting louder in recent times. Last week, TVS chairman Venu Srinivasan said in a statement that the tax rate needed to be reconsidered given the importance of the two-wheeler segment as an item for mass mobility.

“It certainly cannot be benchmarked against the prevalent GST rates for luxury goods at 28%, especially given the current state of inconsistencies with the integrated multi-modal public transport systems across India,” said Srinivasan, a couple of days before the GST Council meet on January 10.

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Two weeks ago, the country’s largest two-wheeler maker Hero MotoCorp had made the same demand. “The reduction in tax rate would not only help millions of two-wheeler customers, but also the entire value chain dependent on the sector,” its chairman, Pawan Munjal, said in a statement. Bajaj Auto Managing Director Rajiv Bajaj has reportedly supported this demand, too.

The fact that prices of two-wheelers expected to increase post the implementation of the new safety norms and the transition to BS VI emission norms lends urgency to the demand for a GST rate cut, but the latest GST Council meet did not address the issue.

That’s worrying news for a sector already buffeted by several headwinds in the past year such as spiralling fuel prices, poor consumer sentiment, pricing pressure on account of the new insurance slabs, and the liquidity crisis in the market following IL&FS debacle. According to The Economic Times, the recent festive season also saw extremely lacklustre demand – although some rural markets posted growth, others are yet to pick up pace.

The GST Council had last tinkered with tax rates in the December meet, when it slashed tax rates on seven items previously placed in the highest tax slab. In total, the panel had reduced rates on 23 goods and services.


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