Home Bike News FADA Appeals for Reduced GST on Two-Wheelers: 28% to 18%

FADA Appeals for Reduced GST on Two-Wheelers: 28% to 18%

by Navyatha Sandiri

FADA requests the GST council and asked to take into account the lowering of the Goods and Services Tax (GST) rate on two-wheelers by the Federation of Automobile Dealers Associations (FADA). FADA, a prominent automotive industry body, has put forth a demand to lower the current GST rate of 28% to 18% with immediate effect.

This plea comes as a result of the challenges faced by the two-wheeler industry in recent times. The COVID-19 pandemic and subsequent lockdowns have significantly impacted the sector, leading to a decline in sales and overall demand. FADA believes that a reduction in the GST rate would help stimulate the market and provide relief to both manufacturers and customers.

Lowering the GST rate on two-wheelers would have several positive implications. Firstly, it would make two-wheelers more affordable for consumers, potentially driving up sales and revitalizing the industry. Additionally, a reduction in the tax burden would ease the financial strain on manufacturers and dealers, allowing them to invest in marketing efforts and product enhancements.

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FADA’s proposal also highlights the potential long-term benefits of a reduced GST rate. A thriving two-wheeler market could create employment opportunities, boost economic growth, and contribute to the overall development of the automotive sector. Furthermore, it would encourage more people to opt for two-wheelers as a convenient and eco-friendly mode of transportation, aligning with the government’s initiatives for sustainable mobility.

However, it is important to consider the potential impact of a reduced GST rate on the government’s revenue collection. The GST rate reduction would need to be balanced with measures to ensure the overall fiscal health of the country. The GST council must evaluate the financial implications and consult with relevant stakeholders before making any decisions.

The GST Council has recommended lowering the GST rate on two-wheelers from 28% to 18% by the Federation of Automobile Dealers Associations (FADA). This move is expected to provide much-needed impetus to the two-wheeler industry, boost sales, and stimulate economic growth. While the final decision lies with the GST council, FADA’s plea reflects the concerns and aspirations of the automotive sector, as it seeks measures to navigate through the challenging times and emerge stronger.

The intervention, according to a statement from FADA, aims to increase the affordability of two-wheelers, boost demand, and revitalize the sector, which has experienced a sharp decline in sales over the past few years.

According to the organization, the Ministry of Heavy Industries, which regulates the car industry, and the Ministry of Road Transport & Highways have all received FADA’s request for a drop in the GST rate on two-wheelers.

Over the past few years, two-wheeler prices have climbed dramatically. Rising raw material costs, stricter emission regulations, and increased taxes and levies are a few potential causes of the price increase, according to FADA, which has affected customers’ capacity to afford products across the nation.

For instance, in 2023, the Honda Activa’s price rose from $52,000 to $88,000. Similarly to this, a Bajaj Pulsar that cost 72,000 in 2016 is now 1,50,000. According to FADA, the ongoing increase in two-wheeler pricing has caused a decrease in sales.

In 2016, 78% of all automotive sales in the nation were two-wheelers. The car body emphasizes that the contribution has fallen to 72% in 2023 as a result of rising prices.

The transition from BS-4 to BS-6 emission rules, rural suffering, and the significant rise in two-wheeler prices, according to FADA, are just a few of the pressing concerns facing the industry that will be addressed by a lower GST rate.

The document claims that lowering the GST rate will make two-wheelers more competitive with other forms of transportation and boost industry sales and revenue.

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Two-wheelers use less fuel per kilometer traveled compared to cars and other larger vehicles, which reduces carbon dioxide emissions. Additionally, their small size improves maneuverability and eases traffic congestion on the roadways, which improves traffic flow and lowers overall emissions.

Additionally, the lower GST rate for two-wheelers may persuade individuals to transfer from older, more polluting vehicles to newer, environmentally friendly substitutes. This change could help the air quality, especially in highly populated cities where vehicular pollution is a significant problem.

The FADA’s stance on the environmental benefits of reducing GST on two-wheelers aligns with the broader global agenda of sustainable development and combatting climate change. Governments around the world are recognizing the importance of transitioning to cleaner modes of transportation, and a favorable tax policy can play a vital role in incentivizing this shift.

In conclusion, FADA highlights that the reduction in GST on two-wheelers not only brings economic advantages but also positively impacts the environment. By promoting fuel-efficient and less-polluting vehicles, such a move can contribute to reducing emissions, improving air quality, and fostering a greener transportation ecosystem. It reflects the growing recognition of the need for sustainable practices and the role of tax policies in shaping environmentally friendly choices.