Budget 2022 For Auto Sector: 2021 has been very challenging for the country’s automobile sector. However, after March 2020, the concerns of the automobile sector had increased since the Corona period. Finance Minister Nirmala Sitharaman will present the budget on February 1, 2022. The automobile sector has high hopes from this budget that the government can make many announcements in the budget to get them out of this crisis.
2021 has been bad for the automobile sector
In 2021, rising costs have troubled the automobile sector the most. There has been a huge increase in the prices of many commodities ranging from steel, aluminum. There has been a tremendous increase in the logistics cost. At the same time, the lack of semiconductor chip has worked to increase the troubles of the automobile sector. Despite the demand, due to the shortage of semiconductor chips, there was a decrease in production in the country. The government has recently taken a big decision to encourage investment for making semiconductor chips in the country. But in the long term, the automobile sector needs a big relief as the auto sector accounts for 7.5 percent of the country’s GDP.
Reducing tax will help in increasing sales
The automobile sector is considered important for the country’s economy. In recent times, many companies have increased the prices to pass on the rising cost to the customers. Expensive fuel and costly insurance expenses have also kept the customers worried. In such a situation, reducing the tax on vehicles will encourage customers and help automobile companies to increase sales.
Demand to reduce GST
Automobile companies are demanding reduction in the GST rate on two wheelers in the electric vehicle segment. So that the electric two wheeler can be made affordable. The auto component industry has also demanded relief from the central government in the budget. Their demand is that all types of auto parts should be levied uniform 18% GST (Goods and Services Tax), which is currently 28%.
GST also reduced on second hand cars
FADA (Federation of Automobile Dealers Association) also in the budget needed to regulate the GST rates on two wheelers to 18% to bring the two wheeler industry and auto retail business back on track. FADA says that the two wheeler is not used as a luxury but by the lower class and rural class for their everyday needs. Hence the justification for 28% GST + 2% Cess is not valid for the two-wheeler category. The federation has also demanded from the government in the budget to reduce the GST on second hand cars. At present, 12 per cent GST is applicable on cars less than 4000 mm and 18 per cent on cars longer than 4000 mm.
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