The Goods and Services Tax (GST) Council should not lower the tax incidence on petrol- and diesel-run vehicles according to a statement from the Indian Foundation of Transport Research and Training (IFTRT).

These tax levels should be maintained despite the slump in sale reported by auto majors in India.

Incentivise cleaner fuel

The IFTRT, a transport research body, in a statement, said that the GST Council should instead lower the tax incidence only on electric vehicles, CNG, LNG and hydrogen cell fuel vehicles.

The GST Council meeting is slated to be held on June 20.

IFTRT said that there is an “unwarranted clamour for cut in GST rate on automobiles from 28 per cent to 18 per cent due to sudden drop in sales in last 6 months.”

“IFTRT urges in larger interest to rationalise GST on green fuel run vehicles on Electric, CNG and LNG at 18 per cent GST and retaining 28 per cent GST rate on petrol or diesel in the interest of decarbonising the air quality by starting it from Commercial Vehicles to be followed by two wheelers and later passenger cars,” it said.

Reasons for fall

It said that the drop in sales of motor vehicles was due a slowdown in the economy and poor consumer spending power.

“The cutting down of GST on petrol and diesel vehicles shall not serve any medium- and long-term purpose except loss to the state exchequer. Even when there is drop in sales of passenger cars, new models which have been launched in last two months are having large-scale booking and waiting period. In fact, proposed introduction of BS-VI emission norms vehicles may be creating indecision in the minds of consumers and generally weak sentiments on consumer spending too could be factors in drop in auto sales,” the IFTRT said.

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