India’s automobile industry has warned that festive sales could collapse as buyers defer purchases in anticipation of lower GST rates.
The GST Council is scheduled to meet on September 3-4 to discuss a shift to a two-slab structure of 5 per cent and 18 per cent.
In a letter to commerce minister Piyush Goyal, the Federation of Automobile Dealers Associations (FADA) stated that the new GST regime announcement has created a challenging situation for the industry at the ground level.
FADA stated, “Customers are postponing purchases and asking about these new GST rates. This risks a whitewash of early festive sales, with demand only materialising during Diwali.”
At present, automobiles face the top 28 per cent slab plus a compensation cess of 1–22 per cent, taking the effective levy to 29–50 per cent for cars and SUVs. Electric vehicles attract 5 per cent.
FADA, representing 15,000 dealers and 30,000 outlets, has urged the government to implement GST changes before the festive season, extend dealer credit periods and clarify treatment of cess credits.