Ludhiana ( Gurvinder sidhu): MP (Rajya Sabha) from Ludhiana Sanjeev Arora has taken up the issue of reduction of GST on bicycles from 12% to 5% with the Union Finance Minister Nirmala Sitharaman. Arora has shot off a letter to FM in this regard.
In his letter, Arora stated that the present the Goods and Services Tax (GST) structure is adversely affecting the bicycle industry. He advocated for the implementation of a uniform GST rate of 5% across all components, parts, and services within the bicycle value chain. He said bicycles are not only an eco-friendly mode of transportation but also offer a cost-effective solution to many urban and rural mobility challenges. The high GST rate of 12% on bicycles presents a significant financial burden for many individuals, particularly those from lower-income backgrounds who are most likely to benefit from the affordability and practicality of bicycles.
Adding, he said the current GST rate of 12% also presents several challenges for the bicycle industry. One significant issue is the substantial amount of capital that becomes tied up in the form of refunds and Input Tax Credits (ITC). This complex and lengthy process of reclaiming ITC creates a considerable strain on cash flow for manufacturers, suppliers, and retailers, hampering growth of industry.
He said by reducing the GST rate to 5%, the financial burdens could be reduced in certain ways. He added a lower GST rate would reduce the amount of tax credits that businesses need to claim, thus easing the financial strain associated with delayed refunds and complicated ITC processes. This would improve liquidity and ensure that funds are more readily available for reinvestment and operational needs.
Adding, he said with a uniform GST rate of 5%, the overall cost of bicycles would decrease. This would make bicycles more affordable to a larger segment of the population, encouraging greater adoption of this sustainable and health-promoting mode of transportation.
Arora said a consistent GST rate across the supply chain would simplify tax administration and reduce the operational complexity for local manufacturers, suppliers, and retailers. This clarity and predictability would foster a more conducive environment for business growth and innovation.
Further, he said lowering the GST rate would promote the use of bicycles, aligning with the government’s environmental goals. The increased adoption of bicycles would contribute to reduced carbon emissions and traffic congestion.
He also said that reducing the GST rate to 5% would streamline the tax system, reducing compliance costs and improving economic efficiency. This would benefit both businesses and consumers by simplifying transactions and reducing administrative burdens.
Concluding, Arora said he strongly believed that implementing a uniform GST rate of 5% for the bicycle industry would address these financial and operational challenges while aligning with broader goals of sustainability and economic development. He urged upon FM to consider this proposal in next GST council meet and take the necessary steps to effectuate this beneficial change.
Meanwhile, Onkar Pahwa, CMD, Avon Cycles, has appreciated MP Arora for taking up the long-pending issue of GST on bicycles with FM Nirmala Sitharaman. He hoped that the issue would be resolved at the earliest possible time with an initiative taken by Arora. He said the industry would get a great relief after GST on bicycles is reduced from 12% to 5%, adding that this step would not only benefit the industry but also the customers. He remarked, “It will give a boost to the bicycle industry.” He thanked Arora for watching interests of the industry
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