Reduce GST on Automotive Tyres, Don't Treat it on Par with Luxury Goods: ATMA

Automotive Tyre Manufacturers Association on Monday sought a reduction of GST rates on tyres for automobiles to 5% from the current 28%, while asking the government not to treat it on par with luxury goods, citing its cost impact on key sectors such as transportation, agriculture, mining, and construction.

At present, all major categories of automotive tyres attract GST at 28%, the highest tax slab, whereas tractor tyres and aircraft tyres are taxed at 18% and 5% respectively, Automotive Tyre Manufacturers Association (ATMA) said in a statement.

In sectors such as transportation, agriculture, mining, and construction, where tyres form a significant component of operating expenditure, a lower GST rate of 5% would provide meaningful relief to small traders, farmers and enterprises that rely on affordable transportation.

The tyre makers' body further said lowering of GST on automotive tyres would directly reduce vehicle operating costs and help bring down logistics costs, while also extending benefits to farmers, small traders, service providers, and the infrastructure and mining sectors.

"Tyres are indispensable to the movement of people and goods across India. Given their essential role in supporting national priorities of agriculture, logistics efficiency and infrastructure, tyres should not be treated on par with luxury goods," ATMA Chairman Arun Mammen said.

Citing a communication to Union Finance Minister Nirmala Sitharaman, Automotive Tyre Manufacturers Association (ATMA) said it has emphasised that tyres are an essential enabler of mobility across all segments, trucks and buses, passenger cars, two-and three-wheelers, tractors, construction and mining equipment, and therefore merit much lower taxation under the proposed GST rate rationalisation exercise.

ATMA said it has also flagged concerns regarding potential accumulation of unutilised Input Tax Credit (ITC) with tyre dealers once rate changes are implemented.

To mitigate working capital blockage, it has been recommended that revised rates be announced at the earliest, and a one-time refund of unutilised ITC arising out of GST rationalisation be allowed, the statement said.

ATMA's demand comes ahead of the meeting of the GST Council, chaired by Union Finance Minister and comprising ministers from all states and UTs, on September 3 and 4, to discuss reforms proposed by the Centre that mooted most goods be charged at either 5% or 18%.