Kerala FM Thomas Issac says no to GST rate cut on cars, bikes

Kerala Finance Minister Thomas Issac has said that the state government would oppose any proposal by the Centre to lower GST rate on cars and bikes as it would not help and instead result in revenue loss for the states. The Goods and Services Tax (GST) Council will hold its 37th meeting on September 20 in Goa.

Issac said that the central government needs to go for fiscal expansion like the one in 2009 to revive the economy and boost market sentiment.

"I don't support the idea (reducing GST rates) at all. The central government can afford to lose revenue but we cannot. They should go for expansion of fiscal policy," Issac told IANS.

"Do you think demand slowdown in the auto sector is because of higher tax? The tax rate has been reduced so much. It has been reduced to 28 per cent. I don't believe this argument," he added.

Also Read: Slowdown Blues: Carmakers ask govt to cut GST rates on automobile before festival season

Given the 10th straight month of decline in auto sales in the month of August, there has been increase in clamour for a GST rate cut for the sector. Auto industry body, Society of Indian Automobile Manufacturers (SIAM) has urged the government to implement some immediate steps including reducing GST rates on cars from 28 per cent to 18 per cent to help manufacturers amid slumping sales.

Finance Minister Nirmala Sitharaman on Sunday hinted that the government has made a proposal to the GST Council to bring down the tax rate from the highest slab of 28 per cent.

Also Read: Centre looks to cut GST rates on cars amid sharp decline in sales

According to her, the government has met up with stakeholders of various industries that are seeking relief, including the auto sector, and is addressing their issues and recommendations. "One of the suggestions was the reduction of GST rate for the automobile sector," Sitharaman said.

On August 23, the FM Sitharaman announced a slew of measures including hiking depreciation benefit on all vehicles from 15 to 30 percent, deferring a proposed multi-fold increase in registration fee and reversing a five year old ban on government purchases to provide a boost to the domestic automobile industry, which has been battling an unprecedented and protracted slowdown in the domestic market.

Edited by Chitranjan Kumar