India’s finance secretary says he’s open to modifying car tax rates

India’s finance secretary says he’s open to modifying car tax rates

Vehicles are displayed at a toll booth in Mumbai, India, on August 13, 2019. REUTERS / Francis Mascarenhas

NEW DELHI, Aug.25 (Reuters) – India is open to discussing a change in tax rates on cars, the country’s finance secretary said on Wednesday, indicating receptiveness to negotiating a long-standing request from carmakers. cars to cut taxes.

India’s federal goods and services tax (GST) rate on automobiles, including cars, motorcycles and trucks, is as high as 28%, in addition to which states impose other taxes.

Company executives say this makes the vehicles unaffordable for many buyers, especially as high prices for raw materials and upgrades to meet stricter safety and emissions standards have already pushed prices up.

“I would be very happy to collaborate with you to see what we can do even with the tax rates (GST), what adjustments we can make to make sure that certain segments (of vehicles) receive the stimulus they deserve,” said the Secretary of the Treasury. Tarun Bajaj said at a conference hosted by the Society of Indian Automobile Manufacturers (SIAM).

Bajaj, however, said it wanted to better understand from automakers why vehicle sales have been tepid in recent years and whether it was only due to high taxes or other reasons, and what could be done to revive a sector. that the government considers key. to help you meet your growth goals.

Costs have risen over the years and people are finding it increasingly difficult to afford a car, said RC Bhargava, president of Maruti Suzuki (MRTI.NS), India’s largest automaker, during the event when made a pitch to cut taxes.

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Car sales growth has slowed in India in recent years, first due to an economic slowdown in 2019 followed by the pandemic since 2020. More recently, issues such as a global semiconductor shortage have disrupted sales.

Auto companies have pushed for years for lower GST tax rates, which they say could help boost sales.

Reporting by Aditi Shah Edited by Bernadette Baum

Our Standards: The Thomson Reuters Trust Principles.

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