GST Council To Take Up Proposal On Reduction Of Tax On Two Wheelers, Says Finance Minister Nirmala Sitharaman

The Goods and Services Tax (GST) Council is set to take up a proposal for a downward rate revision on two-wheelers which presently attract a 28 per cent GST, reports Economic Times.

According to the report, the development was made public by Finance Minister Nirmala Sitharaman in an interaction with industry leaders at the Confederation of Indian Industry (CII) virtual event. Sitharaman said that two-wheelers are neither a luxury nor sin good and thus merit a rate revision.

"Responding to a question about the need for lowering GST rates on 2-wheelers, she assured that this was indeed a good suggestion as this category is neither a luxury nor a sin good and hence merits a rate revision. Consequently, this will be taken up with the GST Council, she added," the Finance Ministry said in a statement.

The rate cut would come as a major boost for the automobile sector and its large ancillary components maker ecosystem, which has for long been demanding for a GST rate revision citing the demand slowdown in the economy.

Last year, the nation's largest two-wheeler maker Hero MotoCorp had also urged the government to consider a phased reduction in GST on the segment starting with consideration of bikes up to 150cc for the 18 per cent bracket.

It should also be noted that not just motorcycles, but also mopeds and cycles fitted with an auxiliary motor are taxed under the highest tax bracket under the GST at 28 per cent.