Pune: The reduction of Goods and Services Tax (GST) on some categories of automobiles is likely to boost sales during the upcoming festive season and beyond, industry players said.The two-wheeler segment, which never recovered from the pandemic, will certainly get a boost, especially in the low-powered motorcycles, Rajiv Bajaj, MD, Bajaj Auto, said in a television interview.“This will induce the much-needed impetus by boosting consumption and bringing momentum to the automotive industry, which essentially remains the pulse of the Indian economy,” said Santosh Iyer, MD & CEO of Mercedes Benz India.It will lower the cost of most vehicles for consumers by 7-10% and hence boost demand across entry-level and commercial segments. It is expected that much of the savings will be passed on to consumers by the auto manufacturers, especially ahead of the upcoming festive season, Prashant Girbane, director general, Mahratta Chamber of Commerce, Industries and Agriculture (MCCIA), said.Although moving the high-end cars and motorcycles into the 40% tax bracket can offset some of the positive sentiment, the move to shift small cars and bikes into the 18% segment from 28% is targeted at spurring demand from the bottom of the pyramid. The changes in the tax regime are scheduled to be effective from Sept 22, which is well before the festive season, Dilip Batwal, secretary, Federation of Chakan Industries, said.Tata Motors indirect tax head Rajesh Shukla said that the tax rate on auto components is also set at 18%, which will resolve classification disputes for car companies and parts manufacturers.Mahindra Group CEO & MD Anish Shah said that the decision to keep electric vehicles in the 5% slab is a positive step as it will help in adoption of cleaner mobility. The GST rate reduction will mitigate the impact of the recently imposed US tariffs, and the relief given to the commercial vehicle segment will spur freight traffic and bring down the cost of buses and trucks, Shenu Agarwal, MD & CEO, Ashok Leyland, said.The GST council announced a reduction in indirect tax on automobiles and components from 28% to 18% on auto components. It has moved SUVs over 1,500 cc into the 40% slab while removing the 17-22% cess on those vehicles.
