Budget 2022: The Finance Minister can make this pronouncement about the auto industry today.
Today, Finance Minister Nirmala Sitharaman will deliver the Union Budget 2022-23. Everyone is looking forward to hearing what the Finance Minister has to say in this budget. At the same time, the auto sector, which is dealing with the corona outbreak, rising raw material costs, and a lack of semiconductors, has high hopes for this year's budget. It remains to be seen what will be stated in this budget for the car sector.
Vehicle's Goods and Services Tax(GST) rate has been reduced.
Federation of Automobile Dealers Associations (FADA), the group of automotive dealers, has requested that the GST rate on two-wheelers be reduced to 18% in Budget 2022. According to the group, there was a significant drop in automobile demand throughout the Corona period. If the government lowers the GST rate, it will alleviate demand pressures.
Demand for a reduction in the import GST on lithium ion batteries.
The current GST rate on Lithium Ion batteries is 28%. Simultaneously, 18 % GST must be paid on battery replacement and charging services. However, the GST on the sale of a car with a battery is just 5%. However, this raises the issue of inverted duty structure. The car sector is requesting that the GST on this be reduced from 28 % to 18 %. Aside from that, the government can exclude lithium ion battery production taxes in the budget.
Demand for higher RoDTEP (Remission of Duties and Taxes on Export Products) rates.
In its recommendations to the government for the Union Budget, the Automotive Component Manufacturers Association (ACMA), one of the main organizations of the Indian auto component sector, has demanded a uniform GST rate of 18% on all vehicle parts. It has also requested that the government boost the duty and tax exemption rates, i.e. RoDTEP rates, on export items in order to stimulate investment in Research & Development (R&D).
The reduction in GST would stimulate demand for two-wheelers.
According to Federation of Automobile Dealers Associations (FADA), two-wheelers are not considered a luxury item. The majority of individuals utilize it in their daily lives. As a result, levying a 2% chase on top of a 28% GST is incorrect. A levy is charged on luxury goods. According to the group, car prices are always rising owing to increases in raw material prices. In such a case, lowering GST rates will aid in offsetting the cost rise and increasing demand.
