Automobile dealers and industry stakeholders will be meeting Finance Minister Nirmala Sitharaman to discuss the issue of compensation for cess, which lapses with on September 22, when the new Goods and Services Tax (GST) takes effect.
Dealers have stated that if no relief is provided, they could face a loss of upward of ₹2,500 crore in cess.
Sources in the union government state that the government has ruled out any relief on the compensation cess to the dealers.
“We are in constant discussion with various stakeholders and will be meeting the finance minister. We have already met the commerce minister and explained to him the losses the automobile dealers will face if not compensated for the cess. We are hopeful that the finance minister will resolve the issue as soon as possible,” said President, FADA (Federation of Automobile Dealers Association (FADA) to businessline.
The Federation of Automobile Dealers Association (FADA) have stated that cess loss could wipe out profit for the complete year. The automobile dealers’ body has also written a letter to the Prime Minister and Finance Minister for their urgent attention to the issue.
“We have strongly urged the government to provide a transitional provision so that cess balances lying in the ledger as on 21st September 2025 can either be transferred to IGST/CGST credit ledger, and utilised for regular GST liabilities or refunded to avoid permanent loss,” Sachin Vasantrao Mahajan, Chairperson of the Federation of Automobile Dealers Association (FADA) Maharashtra, told businessline.
The GST Council had slashed GST rates on cars up to 4 metres in length and up to 1,200cc engines to 18 per cent from 28 per cent and also removed the cess, making vehicles cheaper. The rates will be implemented from September 22.
OEMs
The dealers have also approached Original Equipment Manufacturers (OEM) asking for their assistance and are offering discounts on high-value vehicles.
“Additional discounts are being offered on vehicles by almost all major dealers before the imposition of the new GST. This is to clear the inventory. However, enquiries have rapidly increased but the number of bookings is minimal as of now,” said a Mahindra & Mahindra dealer.
Source from: https://www.thehindubusinessline.com/economy/auto-dealers-body-to-meet-fm-on-tax-compensation/article70049072.ece
