By Nikunj Ohri, Aftab Ahmed and Aditi Shah
New Delhi (Reuters) -india aims to reduce taxes on small cars and insurance bonuses as part of the extensive reform of tax on goods and services (GST), a government source said on Monday, causing a rally on Indian stock markets.
Prime Minister Narendra Modi’s administration has revealed plans over the weekend for the largest tax repairs since 2017, with consumer, car and insurance companies is likely to be outlined as the largest winners when the prices of the products fall from October after the reform is approved.
The federal government has suggested that GST be reduced to small cars for gasoline and diesel up to 18% of the current 28%, said the source, which is directly engaged in the issue.
Consumption tax on health and life insurance premiums can also be reduced to 5% or even zero by 18% at the moment, the same source said.
Maruti Suzuki’s shares, the largest seller of small gasoline cars in India, jumped nearly 9% on Monday, a leading rally in automotive shares, which helped to push India Nefift with 1.3% higher, at a three -month course for three months.
Shares from other car manufacturers such as Mahindra & Mahindra, as well as motorcycle manufacturers such as Hero Motocorp and Bajaj Auto, which will also benefit from tax reduction, jumped 2% -4% on Monday.
The shares of insurance companies such as Icici Prudential, SBI LIFE and LIC increased by 2% -5% before they pair some profits.
The deep reduction in Modi’s taxes will strain government revenue, but have praised the praise of business and political professionals who say they will strengthen his image in a continuing commercial fight against Washington.
Maruti RC Bhargava chairman said tax rationalization was a “huge reform”.
“With more accessible accessibility, more people will enter the purchase system,” said Ghargawa, who declined to comment on the proposed tax reductions on small cars until the fine print is out.
“This restructuring of GST will increase the competitiveness of Indian products and opening trade borders will bring the necessary competition. Competition combined with your ability to produce and sell at lower prices makes the best efficiency,” he added.
Federal government officials over the weekend said New Delhi offered only two percents of taxation – 5% and 18% – under the renovated structure. The highest percentage of 28% will be eliminated.
However, the new proposal will impose a 40% tax on 5-7 “angry goods” such as tobacco and luxury items.
The announcement will not be valid until the GST Council, which is chaired by the Federal Minister of Finance and has no representatives from all countries, does not nod. It is expected to meet until October.