Automakers Seek Simplified, Uniform GST Structure Ahead of Council Meet

As the GST Council prepares to finalise rate rationalisation on September 3–4, major automakers have lauded the move to simplify India’s indirect tax regime, while urging the government to adopt a uniform approach across vehicle segments and bolster support for electric mobility. Industry leaders warn that clarity and common tax slabs are essential to sustain festive-season demand and accelerate the transition to EVs.

Royal Enfield’s Call for Uniformity

“Motorcycles above 350 cc make up just about 1 percent of India’s two-wheeler market. Raising GST on them would add negligible revenue but contract the segment,” warned Siddhartha Lal, Executive Chairman of Eicher Motors, parent of Royal Enfield. “For Indian riders, these motorcycles are not luxury goods; they are efficient, affordable alternatives to cars, offering lower fuel use and maintenance. A split tax regime would cripple investment and scale, restrict global reach, and hand an opening to foreign competitors. A uniform 18 percent GST on all two-wheelers is critical to sustain India’s leadership and position us as the world’s hub for next-generation mobility.” 

Festive Sales and Dealer Sentiment

Partho Banerjee, Senior Executive Officer (Marketing & Sales), Maruti Suzuki India, noted subdued wholesales in August as buyers adopt a wait-and-watch stance amid GST uncertainty. “Once GST reforms are announced, we expect good sales in the market,” he said, adding that the company recalibrated dispatches in line with demand.

Nalinikanth Gollagunta, CEO, Automotive Division, Mahindra & Mahindra, echoed the need for expeditious clarity. “With the final GST announcement approaching, we consciously decided to bring down wholesale billing to minimise dealer inventory. We look forward to the GST rationalisation, which would be a demand driver through the festive season.”

Supporting Electric Mobility

Hardeep Singh Brar, President & CEO, BMW Group India, emphasised EV incentives. “Expediting clarity on GST rates is essential to get back to speed and ensure the auto sector’s contribution to economic growth during this quarter is robust. We also hope the existing 5 percent GST on passenger electric vehicles is retained to support continued EV adoption.”

Mr Firodia further argued for enhanced EV subsidies: “EVs, after all these years of subsidy, are finally getting accepted and growing; however, penetration is still in single digits at 9 percent. Hence, we should consider subsidy continuation and enhancement for five years clearly, till there is a 40–50 percent shift to the same. For funds, therefore, we needn’t rationalise from 28 to 8 but can instead make a common 15 percent for petrol and enhance subsidy back to Rs 15,000 per kWh. This will serve all purposes.”

Uniform Slabs, Not a Divide

“We welcome the rationalisation of GST to remove complexity and bring about uniformity and the right direction for our country,” said Ajinkya Firodia, Vice Chairman of Kinetic India. “However, there are reports of tax reduction only in smaller capacity vehicles (up to 300 cc) and an increase in above 300 cc. Since the majority of the market, over 2 crore per annum, is already in the lower category, there is no need to create this divide and a mid ground but common tax should be implemented.”

Industry Hope for Broader Relief

Sources indicate the government may merge the current 12 percent and 28 percent slabs into 18 percent for most ICE vehicles and introduce a 40 percent rate for luxury or “sin” goods, retaining 5 percent for EVs. Automakers caution that restricting relief to sub-300 cc two-wheelers could dampen mass-market demand. A uniform, mid-level slab coupled with continued EV incentives, they maintain, would spur purchases and support India’s green mobility goals.

The GST Council meet on September 3–4 will determine whether these industry appeals translate into the final tax structure that dealers and buyers have awaited for months.