The coming of the GST in the country has made nearly every automaker to reduce the prices of its products. However the fear was that the states might increase the taxes to cope up with the loss of revenue.
However the is news to it. The state is planning to have any tax hike as for now. And especially the states without the octroi tax are planning a state tax levy to balance the loss of revenue.
The fact is that an increase in the state tax will bring the prices to the same as before thus the customers won’t benefit themselves after the GST implementations.
Maharashtra has already decided to increase the levy on vehicles by 2% to compensate for the absence of octroi, a state tax which has now been merged with GST.
Automakers had already cut the prices July 1 to pass on lower tax incidence under GST to buyers. They expected this to drive wholesale numbers in a traditionally lean July, with inventory at dealerships also running low.
However such a decision sets back all the celebration after the GST implementation. A levy in the taxes by the state nullifies the effect.
Industry executives had feared as much, and had demanded the central government to subsume road tax in the overarching GST framework. “In the past too, every time the central government lowered excise duty, state governments increased road tax negating the benefit. That is why we had urged the government to subsume road tax in GST,” said Sugato Sen, deputy director general at industry body Society of Indian Automobile Manufacturers.
“Road tax was originally levied as a user charge, but now it has become a source for generating revenue every time there is some deficit.”
