Government considering a reduction in GST on new vehicles with this clause

Nov 26, 2021 1 min read
Government considering a reduction in GST on new vehicles with this clause

Union Minister Nitin Gadkari recently announced that the government is considering even more tax concessions on brand new vehicles bought after scrapping old ones.

The National Automobile Scrappage Policy was formally launched in August 2021 by Prime Minister Narendra Modi. It allows new car buyers to avail upto 25 percent discount in road tax, and zero registrations charges.

According to Gadkari, discussions are on with the GST council to reduce the overall tax for new car buyers who scrap their old cars. The final decision will be taken by the GST Council and the Finance Ministry.

The government is hoping that the scrappage policy will help in the reduction of air pollution on roads. It will also act as booster by up to a 10-12 percent increase in new car sales, which will increase GST collection by Rs 40,000 crore each, for the state and the central governments. The reduction in GST is expected to come from this additional collection of taxes.

It is yet not clear exactly when the GST Council and Finance Ministry will give their verdict on this matter, but it should be soon, as the government has been proactively pushing towards less-polluting and safer vehicles on Indian roads, and the scrappage policy is a key step in realising this goal.

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