Two-wheeler dealers are keeping their stocks low due to uncertainty pertaining to tax payments under GST. This would in turn affect June’s sales numbers as factory dispatches would be reduced. Bajaj Auto dealers in Tamil Nadu have confirmed that they will be keeping their inventory low citing the tax payment schedule in the state. In Tamil Nadu 90 per cent VAT is paid as entry tax when the vehicle enters the showroom and the remaining 10 per cent at the time of the sale of the vehicle.
Post-GST this is expected to change. “Assuming we take 100 vehicles this month, we would have paid 90 per cent as entry tax. However, if we end up selling only 70, the balance 10 per cent tax for these vehicles will be adjusted against the amount already paid for the 100 delivered,” says a Bajaj Auto dealer.
The dealers are maintaining lower stocks due to lack of clarity with respect to GST tax rate whether it will be 28 per cent or 30 per cent. Furthermore, dealers are aggressively selling the two-wheelers in their stocks stating price increase post GST.