Auto industry has approached the government to cut GST on passenger vehicles and two-wheelers from 28 per cent to 18 per cent to compensate the sector, which is expected to see a price hike in range of 10-15 per cent with the coming of new emission and safety regulations.
The industry fears that with the increase in prices, the demand for their products would be impacted.
Currently, automobiles attract peak GST rate of 28 per cent with additional cess ranging from 1 per cent to 15 per cent, depending on the length, engine size and type.
"We want the government to be sensitive to the fact that BS-VI emission introduction (from Apri1, 2020) and other safety regulations will add to the cost. If it adds to the cost it is likely to lead to a slowdown in the demand," Society of Indian Automobile Manufacturers (SIAM) President Rajan Wadhera told reporters here.
If the demand goes down, government collection of taxes would also go down, he added.
"Therefore, for a win-win situation, we are seeking a 18 per cent GST (Goods and Services Tax) in automobiles," Wadhera said.
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A price hike of even 10 per cent would impact the sales of the two-wheeler segment, which currently witnesses offtake of over 22 million units annually, he said.
"In PVs also, the prices are going to go up in the range of 10-15 per cent due to technology and safety enhancements. There also we need serious considerations by the government so that it is a win-win situation for all," Wadhera said.
Earlier this year, Maruti Suzuki India Managing Director and CEO Kenichi Ayukawa had sought a reduction in taxes on automobiles in order to create demand and develop the industry.
Major two-wheeler companies like TVS Motor Company, Hero MotoCorp and Bajaj Auto had also demanded a GST rate cut on two-wheelers.