Neither a luxury nor a sin product, two-wheelers deserve rate revision: says Finance Minister at CII Meet
Two wheelers might see a probable reduction in GST rate. Finance Minister Nirmala Sitharaman today on August 25 while speaking at Confederation of Indian Industry (CII) Meet said that GST Council would take up the industry’s proposal of reducing applicable GST rate on two wheelers. Two wheelers are neither luxury product nor a sin product, still they fall in the highest GST bracket of 28%. Therefore, two wheelers do deserve a GST rate revision.
This is being viewed by the industry as a step which potentially can boost the market in the coming festive season which otherwise is sluggish since being hit by Covid-19 pandemic. The industry suggestion of GST rate cut which seems to have struck a chord with the government can bring back cheers to the two-wheeler market.
GST rate cut decisions are in the purview of GST Council headed by Union Finance Minister and comprising of finance ministers from states. Although it was not made clear when GST council is going to take up the issue but since the next 41st Meeting which is to be held on 27th August 2020 has clearly been announced to have a single agenda regarding compensation to states. Therefore, the GST rate cut on two wheelers is likely to be taken up by the GST Council in its 42nd GST Council Meeting scheduled for 19th September 2020.
Ram Rastogi, banking veteran of 35 years’ experience and finance consultant from Noida while commenting on this says that it’s a difficult situation which poses a different challenge for the government. At one hand government has to take steps to boost the business where one can say that GST rate cut could be a useful tool. While at the other hand revenue is a biggest concern in this slow-moving market. Compensation issue raised by states for their revenue shortfall is blowing hot and cold where government is exploring the borrowing option which is not an easy option at all. And in 27th August GST council meeting, revenue generation is also going to be explored to meet the compensation requirements. So here lies the dilemma in this crucial time.
Finance Minister at the CII Meet also said that some sectors like tourism, real estate, hospitality sector and airlines have been hit disproportionately. She also accepted that during this time domestic revenue generation is a concern.
The government is also going to review the standard operating procedures (SoP) for hotels, banquets and other related activities in order to provide them some relief as hospitality industry is going through worse phase due to Covid pandemic.
