FADA Urges GST Council to Reduce GST Rates on Two Wheelers to 18% From 28%

The Federation of Automobile Dealers Associations (FADA) has made an appeal to the GST Council, urging a decline in the GST rate on two-wheelers. FADA is urging for an immediate reduction of the GST rates from the existing 28% to 18%. 

FADA, in a statement, expressed that their request for a reduction in the GST rate on two-wheelers aims to enhance affordability, stimulate demand, and rejuvenate the industry, which has experienced a notable decline in sales in recent years.

FADA has conveyed that it has formally submitted its appeal for a reduction in the GST rate on two-wheelers to various stakeholders, including the Finance Minister, who chairs the GST Council including all members of the GST Council, the Ministry of Heavy Industries of the automobile sector, & the Ministry of Road Transport & Highways.

According to FADA, the prices of two-wheelers have witnessed a notable increase in recent years. This surge in prices can be attributed to various factors such as the escalating cost of raw materials, the enforcement of stricter emission regulations, and the imposition of higher taxes and levies.

As a result, FADA emphasizes that the affordability of two-wheelers has been adversely affected by consumers nationwide.

For instance, To provide an example, FADA highlights that the price of Honda Activa has surged from Rs. 52,000 in 2016 to Rs. 88,000 in 2023. Similarly, the cost of Bajaj Pulsar has risen from Rs. 72,000 in 2016 to Rs. 1,50,000. FADA points out that this continuous escalation in two-wheeler prices has resulted in a decline in sales. In 2016, two-wheelers constituted 78% of the total automobile sales in the country. However, due to the persistent price increases, their contribution has decreased to 72% in 2023, as emphasized by the automobile body.

According to FADA, a decrease in the GST rate can effectively tackle several crucial challenges confronted by the industry. These challenges encompass rural distress, the transition from BS-4 to BS-6 emission norms, and the substantial rise in two-wheeler prices. 

FADA asserts that reducing the GST rate will boost the competitiveness of two-wheelers when compared to other modes of transportation. This, in turn, is expected to result in increased sales and revenue for the industry.