The Federation of
Automobile Dealers Association (FADA) has submitted to the government its
recommendations for the Union Budget 2022-23. The retail body has urged the
government to reduce GST on two-wheelers to 18%, impose a uniform 5% GST on
used cars and sought vehicle depreciation benefits for taxpayers.

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The body represents over 15,000 automobile dealers having 26,500
dealerships. It wants the finance ministry to reduce GST rates on two-wheelers
in order to revive demand. The association said two-wheelers are a
necessity for the poor and in rural areas and the rationale of 28% GST
plus 2% cess, meant for luxury items, does not hold for the industry.

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For used vehicles, FADA has requested a uniform 5% GST rate
against the current rate of 12% for used cars below 4,000 mm length and 18% for
cars above 4,000 mm.

The association has also sought benefits of claiming
depreciation on vehicles for individuals paying income tax. This could increase
the number of individuals filing IT returns, boost demand for two-wheelers
and increase GST collection. 

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Additionally, it requested an extension of the Depreciation Scheme
for FY23. The scheme is valid till March 31, 2020.

The government has lowered
the corporate tax to 25% for private limited companies with a turnover of up to
Rs 400 crore. The industry body pointed out that similar benefits should be
extended to all LLP, proprietary, and partnership firms as most traders within
the auto dealership community fall in these categories.

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FADA said that if these concerns are addressed in the upcoming
budget it could revive the automobile retail trade and bring the industry back
on track along with aiding in overall economic growth.

Budget session in the Parliament will begin on January 31 and Finance Minister Nirmala Sitharaman will present the Budget on February 1 at 11 am.