Punjab, Bihar among states opposing cut in GST to bail out auto sector, fear revenue loss

  • Bihar, West Bengal, Kerala, and Punjab are not in favour of a GST cut to bail out the auto industry

  • States are expected to raise the weak revenue position in the upcoming GST meet, which is to be held on 20 September

  • Bajaj Auto's Managing Director Rajiv Bajaj had recently said that there is no need for a tax cut at this juncture

A section of states has reportedly refused to cut GST rate in favour of the crisis-hit auto industry to save the sector from a deepening slowdown due to fear of revenue loss, said media reports.

States including Bihar, West Bengal, Kerala, and Punjab are not in favour of a GST cut to bail out the auto industry and are of the view that the current crisis in the sector is not due to the GST rate but structural problems in the economy, said a report in Business Standard.

“Bihar will not support any rate reduction on the auto sector, because the revenue position does not allow this,” Sushil Modi, deputy chief minister of Bihar, was quoted as saying in the report.

 Punjab, Bihar among states opposing cut in GST to bail out auto sector, fear revenue loss

Representational image. Reuters

The states that are against the GST cut have put up their concerns on revenue loss if the GST rates are reduced, said a report in The Economic Times.

States are expected to raise the weak revenue position in the upcoming GST meet, which is to be held on 20 September, the report said.

The domestic auto sector is looking to the government for more stimulus to revive the sector. The slump in the auto industry has triggered around 3.5 lakh job losses not only in the sector but its allied sectors as well.

The vehicle manufacturers are looking to the GST Council meeting where they expect government may announce relief measures including rate cuts for the sector.

Not all manufacturers are in favour of a GST rate cut. Bajaj Auto's Managing Director Rajiv Bajaj had recently said that the ongoing slump in the auto industry was mainly due to overproduction and there is no need for a tax cut at this juncture.

 

Early this month, Union minister Nitin Gadkari assured the crisis-hit automobile industry of all possible support from the government, including taking up the demand of GST reduction with Union Finance Minister Nirmala Sitharaman.

Reiterating that the government would help the industry, the road transport and highways minister also said his ministry would give out 68 road projects worth up to Rs 5 lakh crore in the next three months to help generate demand for commercial vehicles.

With inputs from agencies

Updated Date: Sep 13, 2019 17:34:36 IST