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GST Affects Car Prices Of Various Automobile

Indian country is moving quickly towards the execution of GST as the GST council seems to fix the price rate of various items from 18th may 2017 onwards. The price rates of about 1200 items were fixed so far and plenty of needed items like consumer goods are considered to become cheaper and small car owners have to face displeasure. Beneath the new GST arrangement, vehicles are subjected to normal 28% tax price along with some added cess.

GST Affects Car Prices in India

The price of cess as well as the classification of cars beneath this structure is planned to be disclosed by council of GST. While speaking about the taxation change, Sarika Goel who is a Tax Partner declares that GST council has debated for GST rates of each vehicle based upon its classifications. The taxation of luxury cars is widely expected to increase by 28% along with cess of 15%. Another interesting fact about this council is that it had considerably charge for cess even for small cars along with 28% of GST but it is much lower than the luxury vehicles. The major difference existing between small and luxury car is that its engine capacity and length.

Small Cars

Some of the small cars includes of Kwid, Polo, Baleno, Alto and i20. as per the current tax structure, the small vehicles which are having less than 4 meter lengths and petrol engine beneath 1200 CC as well as diesel engine beneath 1500 CC are considered to pay tax of about 12.5% with added 12.5%-14.5% of levies and VAT. In total, the tax rate will be around 25%-27.5%. The new taxation rate next to the implementation of post GST will increase the total figure to about 29%, ending in increased price rate of small vehicles. Due to the price-sensitive issue in the country’s SUV market, it will have negative effect on purchase of the vehicles and it adversely affects the manufacturers as well.

Sedan & SUVs

Mid-Segment cars like Duster, Ciaz, Creta, Hondo City and Hyundai Creta are likely to stay unaltered by GST price rates as these cars are previously charged around 43 percent of GST tax rate. moreover, the flat 15% cess and 28% tax will comes around total of 43%, ending in almost no alteration. If the cess on this vehicle segment, we might ensure a little reduction in price rate.

Also Check : GST- What We Can Expect For The Auto Industry From 1st July 2017

Luxury Vehicles

People expecting to purchase luxury vehicles or SUVs thus have an apt reason to celebrate as GST will decrease the price rate of such cars. Some of the luxury vehicles are Mercedes-Benz, Volvo, Jaguar, Audi and BMW. Automobiles coming under this bracket are highly subjected to massive tax rate of about 55% totally. Due to the implementation of post-GST, the rate of vehicles will reduce significantly to about 43%, resulting in decrease of 12% of tax rate. It indicates that next SUV or luxury vehicles seem to become considerably cheaper.

Rebates or concessions on electric and hybrid vehicles are not yet announced and awaiting for the announcement from the government.

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