New GST Rates and their Impact on Heavy Industries: Ministry of Heavy Industries Issues Press Release
Tractors, which are very important to India’s farm sector, now attract only 5% GST on models below 1800cc and on parts, down from 12%, while larger tractors have also seen reductions.
GST - rates - Taxscan
GST - rates - Taxscan
The Ministry of Heavy Industries issued a press release listing the new GST ( Goods and Services Tax ) rate and their impact on the industries. According to the ministry, the rates will improve the industrial base of the country and also improve different areas of the economy.
In the automobile sector, GST on two-wheelers up to 350cc has been slashed from 28% to 18%, reducing costs for youth, professionals, and rural households where bikes remain the dominant mode of transport.
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It is expected that low prices will also help freelance employees and increase rural mobility. While larger cars will gain from predictability and full input tax credit benefits under a flat 40% rate without a cess, compact cars, now taxed at 18% instead of 28%, will increase household mobility and first-time ownership in smaller towns.
Tractors, which are very important to India’s farm sector, now attract only 5% GST on models below 1800cc and on parts, down from 12%, while larger tractors have also seen reductions. “This will increase the affordability of tractors and increase mechanisation in the agriculture sector. This will improve the productivity of staple crops like paddy, wheat, etc., said the ministry in its press release.
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Similar to this, bus GST reductions (from 28% to 18%) will lower the cost of public transportation, and facilitate both urban and rural travel. In accordance with the National Logistics Policy and PM Gati Shakti, the 18% tax on commercial trucks and goods vehicles will cut freight costs, improve supply chain performance, and reduce the impact of inflation in the FMCG, e-commerce, cement, and agriculture sectors.
The reduction of auto components to 18% has benefited manufacturers and related businesses. In addition to these changes, the GST on goods carriers' third-party insurance has been lowered to 5%, which further lowers logistical expenses. Businesses now have the option to select between 5% and 18%, depending on their input tax credit requirements, as part of the rationalization of passenger and goods transport services.
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