Auto Industry Asks For GST Reduction Among Other Requests In The Wake Of Coronavirus
Published On Apr 15, 2020 08:00 AM By Dhruv.A

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The requests to the government call for an incentive-based scrappage policy

The auto industry came to a halt last month due to the lockdown imposed to contain the spread of coronavirus. This move has been harsh on the automotive industry, including those employed by it directly as well as indirectly. Thus, FADA (Federation of Automobile Dealer Association) has once again approached the government for some relief.

This time around, it has sent a letter to the Prime Minister listing out measures to safeguard auto dealers post COVID-19 lockdown. These measures are aimed at easing the burden on the automotive sector and rekindling sales to help set the course for the future. Here’s a look at all of them:

Slight relaxation in GST rates for new car buyers and the automotive sector (it currently ranges between 29 and 50 per cent) for a temporary period to aid demand once the lockdown is over. This move should give a shot in the arm to the dwindling industry.

Reduction of at least three to four per cent in interest rates through banking institutions.

Extend Corporate Depreciation Scheme (originally expired by 31 March 2020) till FY2021. If approved, this will result in 15 per cent higher depreciation rate and lower insurance premium (from second year) on vehicles sold to corporates and businesses. FADA has proposed a similar treatment to individual buyers but at a higher 25 per cent rate.

An incentive-based scrappage policy for old cars to promote new car sales.

The report has also asked for a priority tag for the auto sector for a period of 12 months. This will allow banks to allot a certain portion of their funds to cater to the demand of the dealers as well as car buyers. If green-lighted, loans related to the auto sector will be disbursed with relative ease.

As things stand right now, the lockdown has been extended till 3 May 2020. Once it is lifted, auto dealers will be scampering to clear 10 per cent of its BS4 stock but within ten days of returning to normalcy, as mandated by the Supreme Court.

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Apr 15, 2020 2:38:25 PM

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