Include mid-size vehicles under GST 2.0 concessions: Association

The Karnataka State Travel Operators Association (KSTOA) has raised strong objections to the Goods and Services Tax (GST) 2.0 reforms, which exclude mid-sized multi-purpose vehicles (MPVs) and sport utility vehicles (SUVs) from the revised concessional tax structure.

In a recent letter to the Union Finance Ministry, the association termed the move, which classifies these vehicles as luxury passenger cars instead of essential tourism fleet vehicles, as ‘grave injustice’ to the travel and tourism industry.

Serious injustice

KSTOA President K. Radhakrishna Holla said the exclusion of widely used mid-sized MPVs and SUVs used in tourism operations would have adverse effects on travel businesses. “Treating these vehicles as luxury-class passenger cars rather than essential tourism fleet vehicles is a serious injustice. At present, they attract up to 40% tax, creating a heavy burden on mid-segment travel operators. As a result, operator costs are sharply increasing, passenger service rates are rising, and the overall growth of the tourism sector is being stifled,” he said.

Mr. Holla urged the Union Finance Ministry and the Fitment Committee to recognise mid-sized passenger vehicles as the ‘real workhorses of Indian tourism’ and extend appropriate tax concessions to them. “The goal of GST 2.0 should be to deliver simple and equitable tax benefits across all sectors. The mid-segment travel industry cannot be left out. We urge the Finance Ministry to urgently reconsider this matter,” he added.

Supporting the association’s demand, Manjunath K.R., a cab driver from Rajajinagar who operates an SUV for Bengaluru airport and outstation trips, said the reform would directly affect drivers’ earnings. “Most tourists prefer bigger vehicles for comfort and luggage space. But high taxes mean operators charge more, and passengers hesitate to book. If larger vehicles are also given tax benefits, more drivers like me will get consistent trips and better income,” he said.

The association, however, welcomed the announcement under the GST 2.0 reforms granting an 18% concessional tax rate for vehicles below 1200cc or 4000mm in length. It described the move as a “genuine boost” for small vehicle owners and certain segments of the tourism sector.