Says slowdown in sector not linked to GST
Key states have expressed reservations on a cut in the goods and services tax (GST) rate for the auto sector because of the grim revenue situation, after the fitment panel refrained from recommending any such reduction.
Facing a deepening slowdown, the auto sector is pinning hopes on the GST Council meeting on September 20 for a GST rate cut from 28 per cent to 18 per cent. However, states including Bihar, West Bengal, Kerala, and Punjab are of the view that the slowdown in the auto sector is not because of the GST rate but structural issues in the economy.
“Bihar will not support any rate reduction on the auto sector, because the revenue position does not allow this,” said Sushil Modi, deputy chief minister, Bihar. Sushil Modi even ruled out supporting the sector by abolishing the cess component. “Where will the Centre get funds to compensate states? The revenue position is grim,” he said. The fitment committee in its meeting last week had stated a potential revenue loss of around Rs 50,000 crore annually in case the rate was reduced from 28 per cent to 18 per cent.
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