GST rationalisation: Tyre industry seeks lower GST rates

Automotive Tyre Manufacturers Association (ATMA), a representative body of six large tyre companies in India accounting for over 90% of tyre production, has sought for lower GST rates in the proposed GST rate rationalisation exercise.

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, ATMA said in a statement.

In a communication to the Union Finance Minister Nirmala Sitharaman, ATMA has emphasised that tyres are an essential enablers 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.

“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”, said Mr. Arun Mammen, Chairman ATMA.

Especially 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, 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, ATMA has recommended that revised rates be announced at the earliest, and a one-time refund of unutilised ITC arising out of GST rationalisation be allowed.