Govt Hints At GST Cut; Could Two-Wheelers Get Cheaper?

The reduction in GST rates will be a shot in the arm for the two-wheeler industry. 

UPDATE: The GST council has confirmed that it wouldn’t be reducing GST rates for two-wheelers. We feel this is another blow to the two-wheeler manufacturers who have been suffering owing to the pandemic. While sales for bikes and cars have increased over the past few months, the GST cut could have boosted sales further. Apart from making two-wheelers affordable to consumers, the jump in sales would have also benefited the dealers and the personnel working for them, many of whom lost their jobs when sales came to a halt due to the COVID-19 pandemic. Our suggestion will be to at least reduce tax for two-wheelers under 150cc as these are the people movers and not a luxury purchase.

Two-wheeler prices have witnessed a steady hike over the past few years. It isn’t that the two-wheeler giants are getting greedy and want to increase profits by charging you more, but rather the new policies of our government. From new insurance policies to ABS and finally BS6, there have been a lot of reforms to improve safety and reduce emissions, which is a great step. However, these updates have come at a price and consumers are the ones who have had to bear the additional expenses. Another major reason for the hike in price was the revision of GST (goods and services tax) on two-wheelers to 28 percent. All the above factors have resulted in two-wheeler costs rising by 30-35 percent. 

If that wasn’t bad enough, the ongoing COVID-19 pandemic and the resultant lockdown has hit two-wheeler brands hard. With the economy facing an uncertain future, consumers are likely to be conservative with their spending and this could further affect two-wheeler manufacturers. However, there is a ray of hope. In a recent virtual interaction of the Confederation of Indian Industries (CII) forum, a query was raised on reducing GST rates for two-wheelers. Finance Minister Nirmala Sitharaman replied that it’s a good suggestion since two-wheelers don’t fall under the luxury category nor is it a sin good. She further added that the reduction of GST for two-wheelers will be discussed with the GST council.

If the government reduced GST rates by 10 percent, prices of two-wheelers could fall by as much as Rs 7,000 to Rs 15,000 depending on the segment. This will come as a huge relief to consumers as many people are preferring personal transportation over public transportation as a safety precaution due to COVID-19. We really hope that the government goes ahead with this initiative which will give relief to the brands and also help revive the economy. Watch this space for more updates.