Get All Access for $5/mo

What Effect Would GST Cut Rate Have On Auto Sector? FM mentioned that proposal has been submitted to GST council for bringing down the tax rate higher from 28 percent

By Vinayak Sharma

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Businesstoday

Against the backdrop of declining auto sales and increasing disturbance in the auto sector, government has decided to deliver some better news. According to the Finance Minister, government has set up a meeting with the stakeholders of various industries seeking relief and sharing its recommendation including the auto sector and related.

"One of the suggestions was the reduction of GST rate for the automobile sector," IANS quoted her as saying, but she emphasized that the authority lies with the GST Council, which is scheduled to meet in Goa on September 20".

Reduction in Vehicle Prices

Lower tax rate would directly reduce the vehicle prices of the company which in return will attract more buyers for the vehicles. Domestic sales of the companies related to the auto sector went down to 30% in the month of August. To revive the sales, auto sector proposed government to curb down the rates in the GST slab so as to provide margin in the vehicle prices which will boost up the consumer's sentiments.

Increase in Auto Employment

Curbing down GST rate will give rise to the hiring scale of automobile sector. Hyundai Motor India and Mahindra and Mahindra (M&M) registered a 16.6 per cent and 31.6 per cent dip in sales, respectively, despite multiple new launches in the past year for cushion. This has led to the blockage of hiring and firing in the industry affecting thousands of employees and their lives. GST Rate would give margin to the industry to raise employment for fulfilling the manpower.

While the auto players are now hoping that sales will pick up in the coming festive season. A GST cut would be the trigger to reverse the consumer sentiment.

Anand Mahindra, Chairman, Mahindra & Mahindra, said the most obvious and welcome first-aid would be some temporary relief on the GST front, either by modifying the slabs or by removing the cess. "I would appeal to lenders to take a more supportive approach to the suppliers and dealers, who are the backbone of the auto ecosystem".

FADA president Ashish Kale said "We will get to know by the end of the month if the measures announced by the government are helping (revive demand) In terms of discounts, automakers have done whatever they can. If GST also goes down, then affordability of vehicles will improve significantly."

Vinayak Sharma

Entrepreneur Staff

Correspondent, Entrepreneur India

News and Trends

"45% of All Ongoing Hydropower Projects in India are Ours": Patel Engineering

Patel Engineering reported a turnover of INR 4,400 crore in the last fiscal year, with a projected 10 per cent growth for the current year.

Leadership

Visionaries or Vague Promises? Why Companies Fail Without Leaders Who See Beyond the Bottom Line

Visionary leaders turn bold ideas into lasting impact by building resilience, clarity and future-ready teams.

Science & Technology

5 Rule-Bending AI Hacks to Make Your Mornings More Productive and Profitable

By 2025, AI will transform productivity by streamlining workflows and cutting costs. Major companies like Microsoft, Google, and OpenAI are leading the way, advancing AI into "Phase 3," where tools act as digital assistants. Discover 5 AI hacks to boost efficiency and redefine your daily routine.

Side Hustle

'Hustling Every Day': These Friends Started a Side Hustle With $2,500 Each — It 'Snowballed' to Over $500,000 and Became a Multimillion-Dollar Brand

Paris Emily Nicholson and Saskia Teje Jenkins had a 2020 brainstorm session that led to a lucrative business.

Business News

Former Steve Jobs Intern Says This Is How He Would Have Approached AI

The former intern is now the CEO of AI and data company DataStax.

Living

70% of Small Business Owners Experience Monthly Burnout. Follow These 3 Rules to Avoid the Same Fate.

Here are three guidelines to help entrepreneurs achieve balance, growth and success in both their professional and personal endeavors.