Indian government unlikely to offer tax cuts to domestic auto industry

Friday, 18 September 2020 17:09:28 (GMT+3)   |   Kolkata

In a major setback to Indian automobile manufacturers, the government is unlikely to offer any cuts in the Goods and Service Tax (GST), thereby disappointing industry expectations, government officials said on Friday, September 18.

The officials said that, though no official announcement has been made as yet, it has been communicated to industry representatives that foreign automobile companies operating in India through subsidiaries should look at reducing royalties paid to their parent companies to reduce costs and tide themselves over the current pandemic-hit market conditions instead of looking for a lowering of the GST on automobiles ranging at 28 percent.

The government has communicated to the industry that taxes on the industry have remained nearly stable over the past decade and several incentives for domestic manufacturing and import protection are already being offered, the government informed the industry through the ministry of finance, the officials said.

It has also been noted that that the apex body governing the GST, the GST Council, comprising finance ministers of the central and state governments, will not be amenable to any cut in taxes in a pandemic-hit economy as it will impact total tax collections of the central government and hence further aggravate the amount of taxes devolved to the states from the central government coffers.

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