The automobile sector has called on the Centre to accelerate the rollout of revised Goods and Services Tax (GST) rates, requesting that the changes take effect ahead of Navratri on September 22, according to people familiar with the matter.
Industry leaders fear that delays could dampen festive season sales, as buyers are already holding back on new purchases in anticipation of a tax reduction. Automakers have also flagged procedural hurdles, including those related to input tax credit, that they want addressed alongside the new structure.
The expectations of lower GST rates have started to weigh on retail momentum, with potential customers adopting a wait-and-watch stance. A recent dealer survey by Nuvama Institutional Equities found that while customer inquiries remain strong, fresh bookings slowed sharply last week.
The Federation of Automobile Dealers Associations (FADA) has also raised red flags, warning that the prevailing uncertainty around tax changes is disrupting short-term demand.
GST Restructuring Plans
A Group of Ministers has already endorsed the Centre’s proposal to simplify the tax regime by replacing the current 12% and 28% slabs with 5% and 18%, while introducing a 40% slab for luxury and sin goods. The proposal is expected to be taken up by the GST Council ahead of Diwali.
As part of this rationalisation, the government is weighing a reduction in GST on small cars and two-wheelers from 28% to 18%. Larger vehicles, including SUVs, could move to the 40% category under the new framework.
Industry stakeholders stress that an early rollout, timed with the onset of festive buying, will be critical in reviving sales sentiment and ensuring the sector benefits from the seasonal demand surge.
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