New Delhi, September 1, 2025 — The Automotive Tyre Manufacturers Association (ATMA) has made a strong case for reducing the Goods and Services Tax (GST) on automotive tires from the top 28% slab to a much more reasonable 5%, pushing back against the classification of tyres as luxury items.
Currently, all major types of automotive tyres—including car, two-wheeler, bus, and commercial vehicle tyres—are taxed at 28%, the highest rate under the GST framework. In contrast, tractor tyres and aircraft tyres are taxed at lower rates of 18% and 5%, respectively.
ATMA argues that tyres are not luxury items; rather, they are essential for vital sectors like transportation, farming, mining, and construction. Reducing the GST rate would significantly lower operating and logistics costs for small traders, farmers, and service operators, ultimately benefitting the broader economy
ATMA Chairman Arun Mammen emphasized this point:
“Tyres are indispensable to the movement of people and goods across India… they should not be treated on par with luxury goods.”
ATMA also highlighted potential challenges with unutilized Input Tax Credit (ITC) among tyre dealers once new GST rates are introduced. To address this, ATMA requested quick implementation of rate changes and a one-time refund mechanism for accumulated ITC to prevent cash flow disruption
This appeal comes just ahead of the GST Council meeting scheduled for September 3–4, where broad tax rationalization proposals—including the possibility of consolidating most GST slabs to 5% or 18%—are expected to be discussed.
Why It Matters
| Stakeholder | Implication |
|---|---|
| Farmers & Small Transporters | Lower GST would reduce tyre costs, improving affordability for essential mobility. |
| Logistics & Infrastructure | Reduced tyre costs could lower operating expenses and transport tariffs. |
| Dealers & Retailers | Immediate benefit via ITC refunds to ease liquidity constraints. |
| Government & GST Council | Balancing revenue goals with economic facilitation—potential role in upcoming reforms. |
Conclusion
ATMA’s appeal for lowering GST on automotive tyres from 28% to 5% underscores the industry’s push for equitable tax treatment for a non-luxury, essential good. With the upcoming GST Council meeting, this demand gains timing relevance. Industry watchers and policymakers will be watching to see whether tyres will be reclassified in line with their foundational economic role rather than luxury perception.
