Close on the heels of launching the country’s first Compressed Natural Gas (CNG) motorcycle, Bajaj Auto met officials of the Finance Ministry recently seeking a reduction of goods and services tax (GST) on such two-wheelers.
Government sources said that the Pune-based company made a representation to the ministry recently for bringing the GST on CNG two-wheelers on par with battery electric two-wheeler which is 5%.
Industry sources added that the representation was done through the Society of India Automobile Manufacturers (SIAM), not just for CNG but ethanol-based vehicles too. SIAM is the country’s apex lobby body for the auto industry.
However, the Fitment Committee, of the GST Council is unlikely to consider the proposal anytime soon. An official said, “There is nothing on table right now. We’ll see the issue later.” The 54th GST Council meeting is scheduled for September 9.
“SIAM denies reports of any formal delegation level meeting with the government recently on this issue,” a mail from SIAM said when contacted for comments.
At the launch of the Freedom 125 in July which was attended by union minister Nitin Gadkari, Rajiv Bajaj, managing director, Bajaj Auto batted for a moderation in GST on CNG-powered two-wheelers. The Freedom 125 is the country’s first dual fuel-powered motorcycle featuring CNG tanks.
“The government should seriously review GST rates for clean fuels, just as they have done the right thing with the 5% GST for electric,” he had said then.
Two-wheelers up to 350cc are slapped with a GST of 28% while those above that carry a 3% compensation cess over and above the GST, pushing the total tax to be 31%.
While three-wheelers, passenger vehicles and commercial vehicles are also powered by CNG, these do not get a special treatment under GST as they are treated on par with other internal combustion engines powered by petrol and diesel.
Bajaj further added, “Major two-wheeler markets in Latin America and AEASN, the equivalent of GST is 8-14% and without exception, the GDP per capita was equal to, or higher, in these countries than India.”
“So, the aam aadmi (common man) of India is the one who can afford the least out of Thailand, Malaysia, Indonesia and Brazil, etc. Then what is the logic, justification of 28% GST?” he asked.
TVS Motor Company, the country’s third largest seller of two-wheelers, is also developing CNG-powered two-wheeler which will be launched either in FY25 or FY26.
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