GST Council may consider proposal to cut tax on two-wheelers

Two-wheeler manufacturers have been urging to the government to lower the goods and services tax (GST) rate on motorcycles and scooters from the current 28 per cent, arguing that it is not a luxury good. Taking cognisance of the industry's demand, Finance minister Nirmala Sitharaman has said that GST Council will consider this proposal to reduce tax on two-wheelers.

Addressing Indian industry at a Confederation of Indian Industries (CII) virtual conference, FM said that most two-wheelers are neither luxury nor demerit goods and hence can be considered for rate revision. "This will be taken up with the GST Council," she said.

The GST council is set to meet on September 19 to discuss rationalising of rates for certain items. The two-wheeler industry is hoping that a cut in tax rate will boost demand ahead of the festival season. The industry is already under stress due to low demand amid coronavirus outbreak and a consequent lockdown.

During the interaction, FM Sitharaman also stressed that structural reforms are a key priority of the government as has been reflected in the slew of measures and policies announced since the COVID-19 outbreak. "Every policy which was introduced had a structural component. Consequently, the reforms are having significant impact on the recovery process which we are currently witnessing," she said.

Taking cognisance of the fact that many sectors such as tourism, hotels and hospitality, real estate and construction, and airlines have been disproportionately affected by the pandemic, the Finance Minister said that these are critical sectors with significant multiplier impact on the economy. In order to ease the pain of few of these ailing sectors, the standard operating procedures (SoPs) for hotels, banquets and related activities will be looked into, she assured. On the issue of strategic disinvestment, Sitharaman highlighted that there was a need to move fast on cabinet cleared disinvestment decisions.

On the issue of local manufacturing, Sitharaman said that Productivity Linked Incentives (PLIs) scheme has met with excellent response and has helped speed up manufacturing of critical bulk drugs and APIs in 6 states.

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