The Indian auto industry is very excited about the next GST Council meeting. The conference, which is set to start tomorrow, September 3, is expected to lead to a big drop in taxes on tiny automobiles and two-wheelers. The rumors and excitement about these possible developments have already had an effect on stock prices in the car industry.
The 56th Meeting of the GST Council
The meeting will last two days and commence at 11:00 a.m. in New Delhi. It will be the 56th GST Council meeting. Union Finance Minister Nirmala Sitharaman will be in charge of the meeting. Finance ministers and high-ranking officials from all states and union territories will be there.
One of the most important things on the agenda is a plan to make the current GST rate structure easier to understand. This means that the 5% and 18% tax brackets will be made more logical, and the 12% and 28% brackets may be removed. There is also a chance that a new, higher 40% tax rate may be added for luxury purchases, “sin goods,” and “demerit goods.” This is part of an effort to make the tax system easier to use. The council is also likely to talk about big changes to the rules for submitting returns, getting refunds, and following the rules. If these amendments are adopted, they might lower the GST rates on many goods, which would make them cheaper for customers.
Big Changes Coming to the Auto Industry
A tax cut for the small car market could be the biggest impact for the auto industry. Small automobiles are taxed at 28% right now, and there is also a cess that can raise the ultimate rate for large SUVs to as high as 50%. The industry wants this to be a flat 18%.
If the GST on compact cars were lowered, their prices could drop by as much as 10%, making them far more affordable for first-time and middle-class customers. This reform will help both consumers and car makers by boosting sales and giving them a much-needed lift. So, there may be a separate, higher tax bracket for bigger cars with engines over 1200cc.
The two-wheeler industry is likewise hoping for a big change in taxes. The new tax plan would put an 18% levy on small motorcycles, especially those with engines smaller than 350cc. On the other hand, motorbikes with bigger engines could be transferred into the new 40% GST group, which shows that they are more expensive vehicles.