GST 2.0 Shake-Up: Auto Sector Faces Rs. 2,500 Crore Loss as Cess Becomes Useless After September 22:

GST 2.0 Shake-Up: Auto Sector Faces Rs. 2,500 Crore Loss as Cess Becomes Useless After September 22 The auto sector is witnessing significant reactions after the government's announcement on revised GST rates. GST rates now has been decreased to 18 % however, earlier it was 28%, while Cess has been completely eliminated. This GST 2.0 will be implemented from September 22, 2025. However, if compensation Cess is deposited with auto dealers, it will become useless after September 22. GST Council's main objective was to eliminate the 12% and 28% slabs and execute new 5%,18% and 40% slabs as well as to remove compensation Cess. Compensation Cess credits were used only to offset the liabilities of compensation Cess. However, now there will be no compensation Cess, because of which the credits deposited previously will also end.

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It has been noted that several auto dealers have accumulated stock for the festive season, because of which the old Cess credits are also stuck with them, which will now become useless. This instance can increase financial pressures for auto dealers as they will not be able to access these credits after September 22. Federation of Automobile Dealers Associations (FADA) has estimated that Auto dealers will have to face a Cess loss of Rs 2500 crores. Dealers say that the reason behind this is uncertainty and use of old Cess. However, GST on small cars with Petrol, CNG, or LPG has been reduced from 28% to 18%:-

• Engine up to 1200 cc and length up to 4000 mm
• Diesel engine up to 1500 cc and length up to 4000 mm

The industry has requested the government to create a mechanism to avoid losses but currently there is no such system.