Two-wheeler manufacturers were in focus on August 26 after Finance Minister Nirmala Sitharaman hinted at a goods and services tax (GST) rate revision for the sector.
Two-wheelers are neither a luxury nor sin goods and so merit a GST rate revision, Sitharaman said at an industry interaction on August 24.
According to a statement issued by CII, Sitharaman said a rate revision proposal would be taken up by the GST Council. Two-wheelers attract 28 percent GST.
Reducing the Goods and Services Tax rate on two-wheelers will be great for the industry and that the government needed to give incentives to consumers at a time when jobs have been cut and affordability is low, Bajaj Auto Managing Director Rajiv Bajaj told CNBC-TV18.
Bajaj said two-wheelers would be cheaper by Rs 8000-10000 if the GST rate was lowered to 18 percent.
According to Jyoti Roy, DVP- Equity Strategy, Angel Broking, there is an increasing likelihood that the GST council may take up the issues of cutting GSt rate on two wheelers from 28%. The finance minister in a CII meeting acknowledged the fact that two wheelers is neither a sin good nor a luxury good. Given that the 28% GST bracket has specifically been created for luxury and sin goods there is likelihood that the Government may take up the issue in the next GST council meeting which will have to take the decision.
If the GST rate cut on the two wheeler industry is approved by the GST council then it will be positive for the industry. We expect two wheeler stocks to react positively to the news today. We continue to maintain our positive stance on the two wheeler sector with Hero Motocorp as our top pick in the sector, she added.
In the morning trade, Hero Motocorp touched a 52-week high of Rs 3,115.80, quoting at Rs 3,100, up Rs 128.95, or 4.34 percent while Scooters India was quoting at Rs 42.10, up Rs 2.00, or 4.99 percent.Atul Auto was at Rs 196.10, up Rs 6.60, or 3.48 percent, TVS Motor Company was quoting at Rs 473.10, up Rs 27.30, or 6.12 percent and Bajaj Auto was quoting at Rs 3,125.00, up Rs 115.00, or 3.82 percent on the BSE.