FADA calls for GST cuts across segments

FADA, the apex body for automobile dealers, has made its Wishlist for Budget 2022 and called for a reduction in GST rates and introduce benefits of claiming depreciation on vehicles for Individuals paying Income Tax.

The dealer body believes that reducing GST rates on two-wheelers to 18% will help sentiment as a two-wheeler is not used as a luxury item but as a necessity. Hence the rationale of 28% GST + 2% cess which is for luxury products does not hold good for the two-Wheeler category. It believes the GST cut can also soften the blow of price hikes every 3-4 months due to higher raw material costs.

The Association believes uniform GST rate of 5% on the margin for all used vehicles will create a win-win situation for the Government, Dealers, and Vehicle Owners. The rate of GST on used cars is currently 12 percent (for vehicles which are sub 4000 mm) and 18 percent for vehicles above 4,000 mm. The used car business occupies 1.4 times the size of new car market, accounting for 5-5.5 million cars per annum with a turnover of over Rs. 1.75 trillion.

 FADA has also requested for reintroduction of Depreciation Scheme, which was valid only till March 31, 2020 to be extended for FY2023 as a measure to revive growth. Moreover, the government has reduced corporate tax to 25 percent for private limited companies with turnover of up to Rs 400 crores. The same benefit should also be extended to all LLP, Proprietary and Partnership firms as most traders within the auto dealership community fall in this category. This will help boost morale and sentiment of the traders.