Panel suggests GST cut, liberal lending for auto

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A parliamentary panel has called for a reduction in GST on automobiles to 18% to spur demand and help the industry overcome the higher cost due to BS6 emission standards. “The increased sale due to the reduction in GST rate will cover up the loss in GST revenue,” the standing committee on commerce, chaired by TRS lawmaker Keshav Rao, said, while also proposing a lower levy on used cars.

It has also recommended that the government should push repo-linked car loans so that the full benefits of the rate cuts announced by the Reserve Bank of India (RBI) are passed on to borrowers. Further, it has said that given the low level of nonperforming assets, estimated at 1.5-2%, on the auto loan segment, banks should be asked to implement a liberal lending policy.

In a set of radical measures, the panel has proposed allowing auto companies, which are still saddled with non-BS6-compliant vehicles, extra time to dispose of the stock and suggested that the government should seek the Supreme Court’s intervention. While batting for a comprehensive electric vehicles policy, the committee has said that the charging infrastructure needs to be bolstered.

Further, it wants the government to put on hold the move to increase registration charges till Covid-19 abates as it will also help the “stressed” auto industry.  “The committee notes that the present system of transferring of vehicles from one state to another is time consuming and cumbersome because it involves manual interaction with state transport authorities.

Taking cue from this situation, the committee in its recent report on the Demands for Grants (2020-21), in respect of DHI (department of heavy industries), which was presented to the House on March 3, 2020, had recommended for a uniform road tax across all states. The committee is hopeful that the government will be able to get through the proposal in the Transport Development Council for introducing ‘One Nation-One Tax’ for benefit of the people,” it added.

While noting that auto industry faced massive losses and had to slash jobs due to the lockdown, the panel has recommended several measures to help the sector come out of stress.

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