NEW DELHI: Shares of two-wheeler makers rose by 2-6 per cent on Wednesday after finance minister Nirmala Sitharaman’s statement on Tuesday that the long pending proposal to cut tax on two-wheelers would be discussed by the GST Council.
At present, two-wheelers attract 28 per cent GST and the industry has been demanding that the rate ought to be brought down to 18 per cent in order to spur demand. The biggest beneficiary of this development in the stock market was Hero MotorCorp, whose shares went up by 6.43 per cent to Rs 3151.95 on the BSE. Bajaj Auto gained 2.42 per cent, while TVS Motor Company gained 4.88 per cent.
“Post the slowdown due to COVID-19, the lowering of GST rate at the earliest, will be a welcome move as it will facilitate the much-needed revival in demand ahead of the festive season...Lowering of GST rates will also help the entire ecosystem of manufacturers, auto ancillaries to dealers, supply chain partners and related vendors.
We will await the next steps and hope this is done soon to give clarity to customers who are seeking to enter the market,” said Sudarshan Venu, Joint Managing Director, TVS Motor Company. Rajiv Bajaj, CEO of Bajaj Auto, said in a TV interview that two-wheelers would be cheaper by Rs 8,000-10,000 if the GST rate was lowered to 18 per cent.
Other auto stocks were also in demand, with Tata Motors rising 8.50 per cent, Ashok Leyland 1.50 per cent, Eicher Motors 1.47 per cent and Mahindra and Mahindra 0.62 per cent. The BSE Auto index closed 1.50 per cent higher at 18,278.57. Two-wheelers are neither a luxury nor sin goods and so merit a goods and services tax (GST) rate revision, Finance Minister Nirmala Sitharaman said at an industry interaction on Tuesday, and said she would raise it at the GST meeting.