NEW DELHI: Reeling under the slowdown and being forced to go for a production cut, the automobile sector is lobbying hard to avail a GST cut on electric vehicles and on auto components, many of which still falls in the highest bracket of 28 per cent.
Auto-makers would like the GST rate on electric vehicles to be reduced to 5 per cent. The GST Council is slated to meet on Friday.
Sources said that industry bodies such as Society of Automobile Industry (SIAM) and component maker body ACMA have written to the council seeking reduction of GST on all vehicles to 18 per cent from the current rate of 28 per cent as they are facing a dual burden of slowing demand and increased cost due to transmission toward newer emission norms.
The demand for automobiles has remained poor since the last six months, which has forced companies including Maruti Suzuki and Mahindra & Mahindra to take unscheduled production holidays in order to avoid piling up of inventory.
While passenger vehicle sales saw the steepest drop in nearly 18 years in May by falling over 20 per cent y-o-y to 2.39 lakh units, the total two-wheelers sales declined by 6.73 per cent compared to May last year.
Besides, SIAM has also demanded a reduction in the corporate tax rate to 25 per cent and weighted deduction for research and development to be reinstated at 200 per cent till the corporate tax rate is reduced.
The Automobile Component Manufacturers Association has been demanding that all auto parts be uniformly taxed at 18 per cent for some time.
Demands