As the government is battling with the reduced tax buoyancy and a yawning revenue fiscal, Finance Minister Nirmala Sitharaman keeps alive for industry’s hope for further tax cuts.
Responding to the observations made by the CII event, on the act for lowering the tax on two-wheelers, the Minister stated that “its indeed a good suggestion as this category is neither luxurious nor a sin good and hence merit a rate revision.”
The remark came forward of the 41st session by GST Council, which was slated on Thursday,
There has been a hike in demand from the automobile sector, including the largest two-wheeler market Hero MotoCorp for relieving in GST rates on bikes and scooters to 18% from the slab of 28% meant for luxury goods, in order to implement rigid demand.
Two-wheeler sales somehow recover in the month of July, which signaled an improvement in rural demand and on good Rabi harvest.
The sales stood at 12,94,49 units up, and 32% demand from June volumes but is still lagging behind by 12% from the previous year.
However, the current junction doesn’t appeal to be encouraging for further rate cuts, as GST revenues are way below the targets.
As the Finance ministry itself stated on Monday regarding contrast to feeling towards Revenue Neutral Rate monitored by the community of 15.3%, whereas the present weightage of the GST rate is at 11.6%.
Confederation of Indian Industry(CII) president Uday Kotak stated, “there are ample signs of a nascent recovery from the lows seen in April-May.”
However, the lockdowns implemented in many states gave rise to supply-side bottlenecks, which could trigger growth when demand cranks up.
The statements and revisions may lead to improvising and stood profitable for recovering the pandemic losses.
The government would also look for operating procedures in reconstructing situations for hotels, banquets, and related activities to ease the hospitality sector’s pain, which has been badly hit by the pandemic.