Budget 2020 Wishlist: Here are the key challenges for automobile sector

Like the last quarter, firms will focus across its value chain to ensure smooth transition to BS-VI

Sector snapshot

The FY20 year-to-date (April to December) domestic sales volumes in all vehicular segments witnessed a sharp decline with passenger vehicles and commercial vehicles reporting 16% and 21% drop, respectively. The key reason is subdued customer demand due to liquidity crunch and higher cost of finance and insurance. Like the last quarter, firms will focus across its value chain to ensure smooth transition to BS-VI.

Key challenges

Higher upfront cost: Customers are required to pay a higher upfront insurance premium for two – wheelers and four – wheelers and hence, sales volumes have dipped in these segments

Shift to BS-VI: The shift to BS-VI by April 2020 will be challenging for automakers as it will result in price increase which is likely to adversely impact demand

Liquidity crunch: The demand was impacted due to squeeze in the NBFC financing

Industry expectations

Reduction in GST rate applicable to automobiles to 18% from the current 28% to absorb the extra price impact of shift to BS-VI A cut in personal income tax rate will provide more disposable income in the hands of consumers, which could lead to automotive demand recovery…Keep Reading

India's GST rates are highest in the world: Manpreet Singh Badal

Congress will strongly raise the issue of compliance and reduction in tax rates at the GST Council meeting in Guwahati: Badal

 

 

 

Exclusion of energy, real estate, and power are leading to cascading of taxes, and need to be brought under the goods and services tax (GST), said Punjab Finance Minister Manpreet Singh Badal. He told Dilasha Seth that the Congress will strongly raise the issue of compliance and reduction in tax rates at the Council meeting in Guwahati on Friday. Edited excerpts:

What are the key concerns that you have raised with the Centre on the GST?

We were told once the GST was implemented, India’s gross domestic product would go up by two per cent, but the opposite has happened. There is something fundamentally wrong with the GST — whether be it the rates, compliance, or the GST Network (GSTN) itself. We have gone in for a reform measure that is half-baked. The Indian GST rate is the highest in the world. Most countries start with a uniform GST rate of a single digit — at best, below 15 per cent; at worst, 18-20 per cent. The GST rates of 40 per cent are unheard of anywhere in the world.(economy policy)

Most of the issues on rates and compliance may get addressed in the Council meeting on Friday. Why is the Congress raising them now?

It has been five months since the GST roll-out. It is now that the government has woken up to the issues we have been talking about. It is too little, too late. It is not a question of the Congress or the BJP, but a question of the livelihood of millions. There has been a change of heart at the Centre. I do not know whether it has to do with the elections, but it needs to be done in the interest of the nation.

You also spoke about including real estate, petrol, and electricity under the GST. Will you effectively raise it in the meeting on Friday?

One has to bring petroleum, real estate, and electricity under the GST. This has, in fact, led to a lot of cascading of taxes across the board. For GST to be effective, all items must be subsumed. At least 50 per cent revenue has been kept out of the GST. There needs to be a discussion on this.

Compliance is another issue you have strongly raised. What is the big demand?

The requirement of matching nearly 3,500 million invoices every month with a possible 20 per cent mismatch will require additional working capital of close to Rs 1 lakh crore. Companies are not getting their input credit on time. Compliance should be made easier. The GSTN needs to be strengthened. The invoice matching glitches should be rectified. We hope to find a solution to that in today’s (Friday’s) meeting.

GST not being charged twice over on credit card payments: Govt busts myths

Please do not recirculate such message without checking it with authority," Adhia said.

Economy news : Two days into the GST regime, Revenue Secretary Hasmukh Adhia today took to Twitter to bust "seven myths" that were doing the rounds about the new tax regime.

Adhia, the architect behind the country's largest tax reform, sought to dispel concerns that if a person makes payment of utility bills by credit cards, the he/she will be paying GST twice.

"This is completely untrue. Please do not recirculate such message without checking it with authority," Adhia said.

India ushered in the Goods and Services Tax (GST) regime on the intervening night of June 30 and July 1.

A four-tier tax slab -- 5, 12, 18 and 28 per cent -- has been decided with essential items like salt, unpacked food grains, healthcare services being kept zero rated.

People have been posting in social media pictures of receipts issued in grocery stores or eateries showing tax deductions as GST, instead of VAT/Service tax earlier.

Busting the myth that GST rates are higher than VAT, Adhia said, "It appears higher because excise duty and other taxes which were invisible earlier are now subsumed in GST and so visible now."

He reiterated that businesses can continue to do business under GST with provisional ID number and need not wait for Goods and Services Taxpayer identification number(GSTIN).

"Provisional ID will be your final GSTIN number. Start business," Adhia said.

He said that businesses need not generate all invoices on computer or internet alone. "Invoices can be generated manually also."

On the rumour that businesses which were earlier exempt will immediately need new registration before starting business now, Adhia said, "You can continue doing business and get registered within 30 days".

He said small retailers need not file invoice-wise details in their return forms and retailers will have to just file one return form as the two other forms will be auto populated by the computer.

"There is only 1 return with 3 parts, out of which first part filed by dealer and two other parts auto populated by computer," he said.

Adhia also said that internet is not needed all the time to do business under GST. The reality is internet would be needed only while filing monthly return of GST, he said.

In a statement, the finance ministry said the two days post GST rollouthas passed "without any major problems being reported" from the field offices.

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