The Federation of Automobile Dealers Associations (FADA) has urged the Union government to reduce GST on two-wheelers to boost sales volume. As part of its pre-Budget recommendations, the association sought GST rates at 18 per cent.
"It is noteworthy that two-wheeler is used not as a luxury, but as a necessity to travel distances by lower class and rural segments for their daily working needs. Hence the rationale of 28 per cent GST plus 2 per cent cess which is for luxury or 'sin products' does not hold good for the two-wheeler category," the federation said.
According to FADA, reduction in GST rate will somewhat counter the continuous price hike in the two-wheeler segment and create fresh demand. For the used car segment, the federation urged the Union government to reduce GST rate to flat 5 per cent from the present 12 per cent and 18 per cent for two different categories of vehicles.
"Reduction in GST will help the industry shift from unorganised segment to organised segment, thus bringing in more business under the ambit of GST helping in putting brake on tax leakages," it added.
Besides, the association seeks reduction in corporate tax to 25 per cent for 'LLP', proprietary and partnership firms in line with private limited companies.
"This (reduction) will help boost morale and sentiment of the traders which employ five million people, out of which 2.5 million employees are in direct employment," it said.
Further, FADA asked the Centre to introduce benefits of claiming depreciation on vehicles for individuals paying income tax.
"The vehicles depreciates for both corporates as well as individuals, and it would hence be judicial that the salaried class should also get the same benefit," it said.