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Govt mulls cutting GST rates as auto sales decline continues

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Monday September 2, 2019 1:58 PM, ummid.com with inputs from IANS

Automobile Sales August

New Delhi/Chennai: Finance Minister Nirmala Sitharaman on Sunday said that the GST Council will take the final call on reducing the tax rate on motor vehicles even as the automobile industry continued to be in the slow lane in August with all major players reporting significant declines in their respective sales.

Tata Motors reported a 49 per cent slump in its domestic sales on a year-on-year (YoY) basis at 29,140 units. The commercial vehicles' sales dipped 45 per cent to 21,824 units, it said. It sold 7,316 passenger vehicles in August, decline of 58 per cent from 17,351 units during the year-ago month.

Maruti Suzuki India reported a 32.7 per cent decline in its vehicle sales last month YoY. The company sold 1,06,413 units, including exports, compared with 1,58,189 vehicles in August 2018.

Of the total off-take, domestic sales fell nearly 36 per cent to 94,728 automobiles. Domestic passenger vehicle sales were down 36.1 per cent at 93,173 units from 1,45,895 during the corresponding month last year, Maruti Suzuki said in a statement.

Similarly, Mahindra and Mahindra's (M&M) local sales declined 26 per cent YoY. It sold 33,564 vehicles during the month against 45,373 units in year-ago month.

"The auto industry continued to be subdued in August due to several external factors," Veejay Ram Nakra, Chief of Sales and Marketing, Automotive Division, M&M.

Hyundai Motor India, sold 38,205 units, lower by 16.58 per cent from 45,801 units in August 2018.

The sector has been going through a slowdown for the past few months due to several reasons including, high Goods and Services Tax (GST) and liquidity crunch.

GST Rate On Vehicles

Finance Minister Nirmala Sitharaman on Sunday said that the GST Council will take the final call on reducing the tax rate on motor vehicles.

Speaking to reporters here, she said that the government is addressing the issues of the automotive segment on the backdrop of the recent slowdown in sales.

"One of the suggestion was the reduction of GST rate for the automobile sector, that of course... will have to go to the (GST) council, but otherwise I have been addressing issues related to BS-IV, inventory...," she added.

The council is likely to meet in Goa on September 20.

Sitharaman said that the sector was facing problems due to several factors, including transition from BS-IV to BS-VI emission norms and prospective buyers were delaying their decision.

To help revive the sector, the Minister on August 23 had announced that the government departments would be allowed to buy new vehicles, automobiles purchased till March 31, 2020 could avail the benefit of additional depreciation of 15 per cent, with total depreciation up to 30 per cent, and BS-IV vehicles bought till March 31, 2020 would remain operational for their entire registration period.

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