Implementation of GST will lead to prices of vehicles coming down, says Pawan Goenka, Executive Director – Mahindra & Mahindra, Group President (Auto & Farm Sector). “I expect vehicle prices to come down. However, it is difficult to define the quantum for the reduction in prices,” Goenka told Bloomberg TV India. Goenka feels that the transition phase to Goods and Services Tax (GST) will be challenging for the auto industry. “With the implementation of GST will truly make India a common market,” he said.
While expressing optimism over the passage of GST, Goenka was also cautious. “This reform has been pending for several years now. People are hopeful that the GST Bill will be passed today by the Rajya Sabha, but there is also a certain degree of skepticism,” Goenka said. “Many people will not take it (GST) till it actually happens,” he added. Goenka is of the opinion that GST will bring in tax transparency and stability. “These two things are very important. And above all, anything that helps better the ease of doing business will please investors and partners,” he said. “After the GST Bill being passed, all eyes will be on the government to see that they are ready for the indirect tax reform’s implementation from April 1, 2017 onwards,” he added.
While Goenka is confident that GST will help bring vehicle prices down, RC Bhargava, Chairman of Maruti Suzuki India is unsure of the tax’s impact on autmobile sector. “I am not sure if taxes on automobiles will come down by 4-5%. The system of GST, as I understand it, is going to be on the final consumer price at the showroom of the dealer. Today excise duties are charged at the ex-factory price. So the base on which the tax is levied will change. But, whether that leads to a lowering of tax or not will only be known once we know the details of how the taxes will be calculated,” he has said.
Echoing Goenka’s view on GST, Anand Mahindra, the chairman and managing director of Mahindra Group had earlier tweeted, “Without GST, India won’t harness its own ‘common market. ‘We’ve been in BREXIT mode without knowing it! Praying for smooth passage of the bill.” For the Bill to sail through the RS, two-thirds of its members (among not less than 50% present) should vote in its favour. While the ruling National Democratic Alliance has 72 members, several major non-NDA parties like SP, NCP, Trinamool, JD(U), CPI(M), etc, are inclined to support the Bill along with many independents. As the Congress with 60 members in the 244-member Upper House is set to support the Bill, its passage now looks almost certain.