Budget 2022 | Expectations Pre-Owned Vehicle Sector – Uniform GST Rate of 5%

The COVID pandemic has caused last-scale disruptions across industries, the auto sector remains to be one of the most impacted sectors. The following global supply chain crisis, semi-conductor shortage, and rising prices of raw materials put a massive strain on the sector which accounts for almost half of India’s industrial GDP.

With safety concerns surrounding public transportation and waiting periods of new vehicles stretching to over 12 months in some cases, pre-owned car businesses saw a surge in demand. Last year the government implemented ‘Scrappage Policy’, leading to further demand for used cars. With Budget 2022 right around the corner, Here is a Wishlist from the leaders from the Pre-Owned Vehicle Industry.

Ruchit Agarwal, Co-Founder & CFO, CARS24

Ruchit Agarwal, Co-Founder & CFO, Cars24 says "Personal mobility has witnessed a significant rise in the post-pandemic world and is now a necessity. The demand for automobiles is directly dependent on the growth of the economy, therefore the upcoming Union Budget will play a critical role in defining the way forward with initiatives such as tax benefits and relaxations for the common man. Additionally, to boost the start-up ecosystem, we look forward to liberal tax benefits and lower interest on capital."

Niraj Singh, Founder & CEO, Spinny

Niraj Singh, Founder & CEO, Spinny says "The Government should introduce more incentives to buyers and sellers to boost the penetration of this segment by incorporating tech advancements and modern solutions with contactless home deliveries, thereby ensuring safety and convenience to customers at every point possible. A uniform GST rate of 5% on the margin for all used vehicles could be a great move and make this segment organized. This will eventually ramp up the demand for second-hand cars by pulling in more customers."

Likewise, the government should also look at empowering the EV sector by making electric vehicles more affordable to the common masses and strengthening the existing charging infrastructure to boost customer confidence. Owing to the rapid increase in vehicular pollution, pushing for a shift to EVs would be the step in the right direction. And for this, the government should evaluate less taxes on EVs and vehicles in general, and consider expanding the possibility of tax deductions on EV loans as well as on other vehicles, too."

Vaibhav Sharma, Founder & CEO at CarzSo

Vaibhav Sharma, Founder & CEO at CarzSo says "Some issues that needs to be looked being uniform GST rate of 5% on the margin for all pre-owned vehicles and introduction of benefits for claiming depreciation on vehicles for Individuals paying Income Tax.

The share of organized sector has been increased from 10% to 21% over last few years and the reduction in GST rate will push more dealers to file GST returns ultimately improving the share of organized sector in the industry.

Introduction of benefits for claiming depreciation on vehicles will also push more individuals to buy cars improving the overall auto retail industry and hence would also down the average age of owning a car.

If these can be approved in the upcoming budget it won’t only give a positive push to the auto retail industry and contributing to the overall growth of Indian GDP but will also be a big step towards organizing the pre-owned cars market."

Jatin Ahuja, Founder, and MD at Big Boy Toyz

Jatin Ahuja, Founder, and MD at Big Boy Toyz, said "The luxury car segment has some of the highest duties, GST, cess and registration costs. I urge the government to kindly review the current tax structure for luxury vehicle cars and come to a more rational tax structure to drive growth in the sector. The automobile sector will be obliged by the government if there is a standardized GST to 12% as now GST varies from 18% to 12% on used cars. It will boost the economy and the sector as well. It will also help the government to get more and more car dealers to roll up for GST."

Sumit Garg, MD and Co-Founder of Luxury Ride

Sumit Garg, MD and Co-Founder of Luxury Ride said "Ahead of the budget session, I am hoping that the forthcoming Union Budget 2022 continues to promote the digitization of automobile sector laws, which will lead to increased vehicle sales, and also promote faster transfer of ownership. Paving the way forward, I am hoping that our government will support cheaper taxes by giving some relaxation on the GST rate on used cars. The reduction in GST will give the desired push to the industry and will ramp up the transition from an unorganised to an organised sector, which will bring more business under the GST umbrella and put an end to tax evasion. Also expecting  some good announcements in favor of chip shortage, electric vehicles which will bring lucrative advantage to the Auto Industry."
 

Sandeep Aggarwal, CEO, DROOM

Sandeep Aggarwal, CEO, DROOM said "Post analyzing the market especially during the pandemic, OEM’s and Dealerships specifically have adopted digital technologies faster in the last two years in comparison to the last five years.We hope that the upcoming Budget 2022 continues to pave the way for digitization of automobile industry regulations that increases inter-state vehicle sales, shorter time period for transfer of ownership and lower taxes. We expect that the government will continue to invest in road infrastructure and should aim to focus on 1 km per minute target for India. 

With the emerging EV technology in the automobile industry, we hope that the government will invest in infrastructure to boost EV demand. The fundamental expectation from the government is that charging infrastructure in the country should be enabled at a faster rate. There is still not much clarity on the electrification of EV charging via open access, the taxation and the wheeling charges. We hope the government addresses this crucial aspect in the Budget 2022.