Auto industry urges Centre to settle Rs 2,500 crore GST 2.0 cess dues in pre-Budget consultations

The auto industry on Thursday urged the finance ministry to settle Rs 2,500 crore in pending GST 2.0 compensation cess during a pre-budget discussion with Finance Minister Nirmala Sitharaman and senior officials.

According to IANS, auto industry leaders, including SIAM, spoke for dealers, primarily small and medium enterprises, about compensation cess balances that could go unused after the September 22 rollout of new GST regulations.

The main concern is that unused compensation cess credits held by car dealers may not be carried forward under the revised GST framework. The Federation of Automobile Dealers Associations (FADA) had approached the Supreme Court in October seeking relief, with the court noting that it supports reform but also emphasises fairness and trust.

The industry had previously appealed to Prime Minister Narendra Modi to intervene and protect dealers’ interests. Besides the compensation cess issue, representatives also asked government officials for support on matters related to ease of doing business and difficulties faced on the GST portal.

Auto industry sees record vehicle sales

In the wake of recent GST rate reductions and strong demand during the holiday season, India's passenger vehicle (PV) industry had its best monthly performance ever in October 2025. Domestic market wholesales increased from 4,01,105 units in October 2024 to 4,70,227 units, a 17.23 per cent increase over the same month last year.

This marked the best month for India's automobile industry to date, surpassing the previous record of 4,05,522 units set in January 2025.

Industry representatives are also pressing the government to deal with unresolved GST compensation issues. According to industry experts, resolving these issues will support sustainable growth, preserve dealer confidence, and improve the general health of India's automotive industry as it continues to grow in response to growing demand.