GST Council To Consider Rate Cut On Two-Wheelers, Nirmala Sitharaman Says
Finance Minister Nirmala Sitharaman.

GST Council To Consider Rate Cut On Two-Wheelers, Nirmala Sitharaman Says

Finance Minister Nirmala Sitharaman said the GST Council will consider lowering the tax rate on two-wheelers as it’s neither a luxury item nor a sin good.

It a “good suggestion”, Sitharaman said while responding to a query at an industry interaction. GST rate on two-wheelers currently stands at 28%.

Her remarks come ahead of the GST Council meetings scheduled on Aug. 27 and Sep. 19. A GST rate cut could push up demand for two-wheelers ahead of the festive season but will impact the government’s revenue at a time tax mop-up has fallen because of the Covid-19 pandemic and the economy is set to contract for the first time in more than four decades.

While reducing rates on several items since the inception of the new indirect tax regime in July 2017, the GST Council has mostly left luxury and sin goods like colas and tobacco products, among others, under the highest slab of 28%. These also attract a compensation cess over and above that rate.

Helping the Ailing Sectors

Sitharaman also said that sectors such as tourism, hotels and hospitality, real estate, construction and airlines are critical with a significant multiplier impact on the Indian economy. The government will look into the standard operating procedures for hotels, banquets and similar activities to ease the pain of few of these ailing sectors, Sitharaman was quoted as saying in a statement.

Pushing Divestment

The government needs to move fast on cabinet-cleared strategic disinvestments, Sitharaman said.

The cabinet, last year, cleared strategic stake sales in state-owned Bharat Petroleum Corp. Ltd., Shipping Corp. of India Ltd., and Container Corp. of India Ltd. These moves are key for the government to meet its ambitious divestment target of Rs 2.1 lakh crore for the current fiscal.

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