New Delhi sources have stated that the cheer that goods and service tax has brought to the automotive market has diminished, with concerns mounting over the risk of states raising road tax to offset revenue loss and was added that Maharashtra has already decided to increase the levy on vehicles by 2% to compensate for the absence of octroi, a state tax which has now been merged with GST.
Currently the automakers have cut prices from July 1 to pass
on lower tax incidence under GST to buyers. They expected this to drive
wholesale numbers in a traditionally lean July, with inventory at dealerships
also running low and the increase in road tax, which is outside GST and set by
states, now stands to dampen the prospects.
Sugato Sen deputy director general at industry body society of Indian Automobile Manufacturers that “industry executives had feared as much, and had demanded the central government to subsume road tax in the overarching GST framework. “In the past too, every time the central government lowered excise duty, state governments increased road tax negating the benefit. That is why we had urged the government to subsume road tax in GST”.
