NEW DELHI, Aug 25 (Reuters) – India is open to discussing a change in tax rates on automobiles, the country’s revenue secretary said on Wednesday, indicating receptiveness over negotiation on a long-standing request from automakers for lower taxes.
India’s federal goods and services tax (GST) rate on automobiles, including cars, motorbikes and trucks, is as high as 28%, on top of which other taxes are imposed by states.
Company executives say this is making vehicles unaffordable for many buyers, especially as high raw material prices and upgrades to meet tougher safety and emission rules have already boosted prices.
“I would be very happy to engage with you to see what we can do even on (GST) tax rates, what is the tinkering we can do to see to it that certain (vehicle) segments get the encouragement they deserve,” revenue secretary Tarun Bajaj said at a conference organised by the Society of Indian Automobile Manufacturers (SIAM).
Costs have surged over the years and people are finding it increasingly difficult to afford a car, R.C. Bhargava, chairman on Maruti Suzuki (MRTI.NS), India’s biggest carmaker, said during the event as he made a pitch for lower taxes.
Growth in automobile sales has decelerated in India over the last few years, first due to an economic slowdown in 2019 followed by the pandemic since 2020. More recently, issues like a global shortage of semiconductors have disrupted sales.
Auto companies have for years lobbied for lower GST tax rates, which they say could help boost sales.