Two-wheeler stocks including Hero MotoCorp, Bajaj Auto and TVS Motors saw a strong upmove on Wednesday after Finance Minister Nirmala Sitharaman said the GST Council may consider a rate revision for the segment.
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The FM said, "This was indeed a good suggestion as this category is (of) neither a luxury nor a sin good and hence merits a rate revision." She added that this will be, consequently, taken up with the GST Council.
The share price of Hero MotoCorp surged the most on the FM's statement, hitting its 52-week high, as it gained as much as 5.21 percent to Rs 3,124.85 per share on the NSE.
While TVS Motors and Bajaj Auto rose as much as 7 percent and 4 percent to Rs 477 and Rs 3,138, respectively.
Rajiv Bajaj, MD of Bajaj Auto, one of the leading two-wheeler manufacturing companies, said that if the GST rate is cut to 18 percent, the buyers would be able to save Rs 8,000-10,000.
Currently, two-wheelers attract 28 percent GST and those above 350cc attract an additional cess of 3 percent over and above the 28 percent GST rate.
The industry has been demanding for a rate reduction, especially for the segment below 150cc, but the Council has still not taken up this issue.
However, sources told CNBC-TV18 that “the proposal of GST rate revision for 2-wheelers will have to be sent to the GST fitment committee and is not likely to be taken up immediately”.