Consequences include the liquidity stress of party season, criminal interest, potential infringements of the covenant and the refinancing pressure on banks/NBFCs exactly when the inventory is building before the September-to-Diwali peak | Photocredit: Velankanni Raj B
New Delhi
The Federation of Automobile Dealers Associations (FADA) has written to Minister of Finance Nirmala Sitharaman and has searched for an urgent appointment to get some clarifications about the GST 2.0 that suppress the earlier compensation regime for cars.
“Dealers nowadays have considerable, validly wrong compensation balances in their electronic credit leaders. As soon as there is no further liability for the Cess, this balance cannot be used against CGST/SGST/IGST under the current law,” said CS Vigneshwar, FADA president, in the letter of 5 September.
The industry agency has asked the FM to transfer the balance into compensation Cess Credit Ledger by September 21, to Igst/ CGST credit book, so their festive sale is not affected.
According to dealers, there would be an estimated stop loss of £ .2,500 crore for them.
“A considerable amount that an individual dealer will not be able to absorb his working capital, because more than 95 percent of the dealer inventory is financed (floor plan/wholesale boundaries). If CESS credits become unusable, that value changes in blocked capital, sampling drawing power and increased use.
Consequences include the Liquidity Stress of festive season, stress for punishment, the criminal interest, potential covenant fractures and refinancing pressure on banks/NBFCs exactly when the inventory is building before the September-to-Diwali peak, “Vigneshwar said.
This is not income, but it is about the preservation of legitimate, tax-paid credits and the prevention of avoidable pressure on both MSME dealers and the financial system, he said.
He further said that the GST framework was designed for seamless credit stream and the expiry of Cess -Saldi would contradict this fundamental principle. “Dealers have stopped in -ner supplies with the legitimate expectation of use. Denial now comes down to return,” added the president of Fada.
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Published on September 8, 2025
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