Kerala On Road Official Blog

Posted on : 4 July 2017

GST- How attractive is this new single tax for vehicle buyers


GST (Goods and Services Tax) is one term we have been listening to off late in the country. Many still wonder what the big hype about this single tax is and what makes it attractive for consumers in the automobile market.

Here is the deal:
1. The GST is charged among the different categories of cars and SUVs (small, large, electric and Hybrid) with the highest rate of 28%.

2. Apart from the GST, the cars will also be charged a cess which makes it cheaper and costlier now at different prices.

3. Cars smaller than 4 metres length and having petrol engines less than 1200cc capacity will be charged a cess of 1% which sums up to 29% of the price as tax. But here, there is some good news that the price of these cars will be lesser than the existing prices as earlier these taxes amounted to 31.5%. Cars falling under this category would be Maruti Suzuki Alto and Baleno, Hyundai i20 and Grand i10, Toyota Liva, Tata Tiago, Renault Kwid and so on.


4. Cars smaller than 4 metres length and having diesel engines less than 1500cc capacity will be charged a cess of 3%, which makes it altogether 31%, yet lesser than the earlier tax of 33.5%. Cars falling under this segment will be the diesel variants of Maruti Suzuki Vitara Brezza and Dzire, Hyundai i20, Volkswagen Ameo , Tata Tigor, Ford Ecosport etc.

5. Sub compact cars with length lesser than 4m, but having engines with a displacement more than 1200cc (petrol) and 1500cc (diesel) will be charged a cess of 15% that totals to 43%. This tax is once again lesser compared to the old tax of 44.7%. The cars under this category would be Ford Eco-sport (Petrol), Hyundai i20 (Diesel) and its likes.

6. Cars (excluding SUVs) longer than 4 metres and with engines having displacement more than 1200cc (petrol) and 1500cc (diesel) will be charged similarly with a cess of 15% making it altogether 43%, but here the price drop is huge as the earlier tax was 51.6%. This applies to cars like Honda City, Maruti Suzuki Ciaz, Mercedes Benz E-class etc.


7. SUVs with length more than 4 metres with any displacement will be charged a cess of 15% again along with the GST of 28% that totals to 43%. This amount is much lesser compared to the earlier tax of 55% making this segment of vehicles cheaper than the rest of the lot. Vehicles falling under this segment are Volkswagen Tiguan, Toyota Fortuner, Tata Hexa, Ford Endeavour and so on.

8. The only segment that suffered blow as a result of GST are the Hybrid vehicles. Their earlier tax of 30.3% is now increased to 43% (GST 28% + Cess 15%) which makes the prices go steep high. Vehicles like Toyota Camry Hybrid and Prius, Lexus ES 300h and few others fall under this category.

9. Unlike other segments, electric cars like Mahindra e2o have been charged with a low slab of 12% with no additional cess that makes the taxes drop by 7.5% compared to the earlier tax of 20.5%. As a matter of fact, Mahindra seems to be the only car manufacturer that retails electric vehicles such as e2o and Verito in India.


From the above information, what we come to understand is more the money spent, more the price drop as the luxury car and SUV buyers are the most benefitted from this new tax regime. With the electric cars having better prices after the GST implementation, it appears that the government is taking all necessary measures to promote electric vehicles further and make India an all-electric nation by 2030 as per plans. On the other hand, the on road prices may not seem as attractive as the tax drop due to the tax hike on the insurance amount. However, GST has definitely brought smiles in the Indian Automobile market considering the uncertainty on its impact over customers that had prevailed over last few months.


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