Reduce GST on tires to 5%: Industry body to government
What's the story
The Automotive Tyre Manufacturers Association (ATMA) has urged the Indian government to reduce the Goods and Services Tax (GST) on automotive tires from 28% to 5%. The industry body has also requested that these essential products not be classified as luxury items. The appeal comes ahead of a GST Council meeting scheduled for September 3-4, where proposed reforms will be discussed.
Tax structure
Current GST rates on automotive tires
Currently, all major categories of automotive tires attract a GST of 28%, the highest tax slab. However, tractor tires and aircraft tires are taxed at 18% and 5%, respectively. ATMA has argued that this high rate on automotive tires adds to the cost burden on key sectors like transportation, agriculture, mining, and construction, where these products form a major part of operational costs.
Economic relief
Benefits of reduced GST rate
ATMA has said that a reduced GST rate of 5% on automotive tires would give significant relief to small traders, farmers, and businesses dependent on affordable transportation. The industry body also stressed that lowering the tax would directly bring down vehicle operating costs and logistics expenses. This move could benefit not just farmers and small traders but also service providers in the infrastructure and mining sectors.
Essential role
Tires should not be treated on par with luxury goods
ATMA Chairman Arun Mammen stressed the indispensable role of tires in movement across India. He said, "Tires are indispensable to the movement of people and goods across India." Mammen further added that given their essential role in supporting national priorities like agriculture and logistics efficiency, "tires should not be treated on par with luxury goods."
Tax credit
ATMA has also flagged concerns over unutilized ITC accumulation
ATMA has also flagged concerns over the possible accumulation of unutilized Input Tax Credit (ITC) with tire dealers after rate changes are implemented. To prevent working capital blockage, the industry body has suggested that revised rates be announced as soon as possible. It has also called for a one-time refund of unutilized ITC arising out of GST rationalization to be allowed.