India’s Ministry of Surface Transport has sought exemption from the Goods and Service Tax (GST) in transactions involving the scrapping old commercial vehicles, senior government officials said on Thursday, May 10.
The sources said that, with the auto scrapping policy to be announced within the next few weeks, the Ministry of Surface Transport has sent the GST exemption proposal to the Cabinet of Ministers for the consideration and subsequent formal approval of the GST Council, the apex body governing the tax regime.
Under the proposal, neither the seller of old commercial vehicles nor the buyer, the steel scrap recycler, will need to pay any tax for the transaction, the sources added.
Additionally, the Ministry of Surface Transport has also sought a lower GST rate of 18 on commercial vehicles when such a vehicle is purchased as a replacement for the scrapped one, the sources said.
The ministry has also estimated that, once the mandatory scrapping of old commercial vehicles comes into effect from April 1, 2020, as per the policy to be announced soon, about 700,000 commercial vehicles will be required to be scrapped in the initial stages of the policy, the sources said.
The mandatory scrapping of old vehicles will be extended to include passenger cars once the policy pertaining to commercial vehicles has stabilized and new metal recycling units became operational to general optimal volumes for the secondary steel-producing sector, the sources added.