The automobile industry has asked the government to reduce the goods and services tax (GST) on CNG and flex fuel-powered two-wheelers, a report said on June 12.
The Society of Indian Automobile Manufacturers (Siam) has written to the heavy industries ministry requesting the GST be brought down to 18 percent from 28 percent, the current base rate for all two-wheelers, a CNBC-TV18 report said.
The industry wants the tax for CNG and flex fuel two-wheelers further lowered to 12 percent, once 18 percent becomes the base rate for all two-wheelers, the report said.
The industry has made this request specifically for two wheelers, the report said.
Though Siam has written to the heavy industries ministry, GST rates can only be decided by GST Council, which has the union finance minister and representatives of all states and union territories as its members.
Hero MotoCorp, Bajaj Auto, and TVS Motor are in various stages of producing CNG and flex-fuel powered two-wheelers.
Also read: Bajaj Auto to launch world's first CNG-powered bike in June, confirms MD Rajiv Bajaj
Bajaj Auto will launch a CNG-powered motorcycle on June 18.
The automobile body also asked the government to remove 3 percent cess imposed on all types of two-wheelers above 350 cc.
According to Siam, these vehicles emit less carbon and are good for the economy. A high tax rate would keep the cost of acquisition out of reach for most and automakers won’t be able to recover the investments made on the research and development of the two-wheelers, it said.
Customers in India pay 28 percent GST, road tax, insurance premium, along with a 3 percent cess, which makes the total tax burden significantly high when compared to other developing nations such as Indonesia and Thailand who have 7-11 percent tax rate, the industry body said.
High tax burden can hamper the adoption of environment-friendly two-wheelers powered by CNG and flex fuel, it said.
In May, Bajaj Auto MD Rajiv Bajaj said the Indian automobile industry was suffering from “over regulation”, leading to a dramatic increase in costs.
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