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FADA Urges Early Rollout Of New GST To Safeguard Festive Auto Sales
India’s car dealers have asked the government to roll out the new Goods and Services Tax (GST) structure sooner than planned, warning that delays could spoil the crucial festive season for the auto industry.
The GST Council, led by Finance Minister Nirmala Sitharaman, is set to meet on September 3–4 to discuss moving from the current four-slab system (5, 12, 18 and 28 per cent) to a simpler two-slab structure of 5 and 18 per cent. A special 40 per cent rate is also on the cards for ultra-luxury cars and sin goods.
At present, vehicles fall under the highest 28 per cent slab, with an additional cess of up to 22 per cent depending on engine size and type. This pushes the total tax burden to between 29 and 50 per cent for cars. Electric vehicles, however, enjoy a much lower 5 per cent rate.
In a letter to Commerce and Industry Minister Piyush Goyal, the Federation of Automobile Dealers Associations (FADA) said the news of GST rationalisation has already led to customers holding back purchases, hoping for price cuts once the new rates arrive.
Dealers are stocking up for major festivals like Onam, Ganesh Chaturthi, Navratri and Diwali. But with buyers deferring bookings, FADA fears sales could stay muted until the new GST kicks in, creating a lopsided season with demand bunching only around Diwali.
To avoid that, the body has asked the Centre to advance the GST Council meeting and bring in the new rates ahead of the festive rush. It also requested banks and non-banking financial companies (NBFCs) to extend repayment cycles for dealer financing by 30–45 days. Inventory is usually funded through short-term credit of 45–60 days, and slow sales could push many dealers into a cash crunch.
FADA further sought clarity on how accumulated cess credits will be treated once the levy is scrapped. Representing over 15,000 dealer principals and nearly 30,000 dealerships, the body said early clarity and quick implementation would ensure the transition is smooth and the festive season doesn’t go to waste.
(With inputs from PTI)
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