Who will win big in PM Narendra Modi’s “big Diwali gift” of “next-generation GST reforms”? According to Zee Business research, in the country’s vast and highly competitive automobile space, companies like M&M, Maruti Suzuki, TVS Motor Company, Bajaj Auto, and Tata Motors are set to be the biggest beneficiaries.
Tractor manufacturers such as Escorts Kubota and Eicher Motors are expected to gain significantly from the tax sops, with the GST rate on the segment slashed to 5 per cent from 12 per cent, say analysts.
On tyres and other auto ancillaries, the rate has been reduced all the way to 5 per cent from 18 per cent.
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Here’s a summary of five major changes in the auto space:
- Petrol and petrol hybrid, LPG, and CNG passenger cars below 1200 cc in the sub-4 metre category will now attract a 1,000-basis-point lower GST of 18 per cent
- Diesel and diesel hybrid cars below 1500 cc in the sub-4 metre category will also be taxed at 18 per cent, instead of 28 per cent
- Three-wheelers will be taxed at 18 per cent instead of 28 per cent
- Motorcycles up to 350 cc will be taxed at 18 per cent instead of 28 per cent
- Goods vehicles will also attract an 18 per cent levy instead of 28 per cent
See full list of PM’s ‘Diwali gift’ GST cuts
Industry cheers GST 2.0 reforms
“The next-generation GST reforms mark a defining moment in India’s journey towards building a simpler, fairer, and more inclusive tax system… At Mahindra, we view these reforms as transformative. They simplify compliance, expand affordability, and energise consumption, while enabling industry to invest with greater confidence,” said Anish Shah, Group CEO and MD, Mahindra Group.
“This bold step strengthens India’s economic foundations and will help drive the next phase of equitable and inclusive growth, moving towards ‘Viksit Bharat @ 2047’ (Developed India by 2047),” he added.
Auto component makers also welcomed the GST announcements. “The rationalisation of GST to a uniform 18 per cent across all auto components has been a long-standing recommendation of ACMA. This decisive step will curb the grey market, encourage the use of quality compliant components, ease compliance, and support MSMEs — thereby strengthening the global competitiveness and resilience of India’s $80.2 billion auto component industry,” said Shradha Suri Marwah, President of ACMA, the apex body for the country’s auto component industry.
“We also welcome the GST Council’s approval for faster export refund claims through ICEGATE for smaller exporters, which will help clear pending shipping bills and significantly ease liquidity constraints,” she added.
“This move on GST reforms is a phenomenal milestone. CII not just welcomes the GST Council’s forward-looking decisions, simplifying refunds and MSME procedures, and exempting individual life and health insurance from GST, but also sees this as pathbreaking. This clarity will ease compliance, reduce litigation, and give businesses and consumers the predictability they need,” said Chandrajit Banerjee, Director General of industry body CII.
“CII strongly holds the view that industry would swiftly to pass benefits to the consumers and partner with the government to ensure a smooth, timely rollout that lifts demand and supports jobs,” he noted.
