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Know about the impact of GST on Automobiles

By KOR team | Pubilshed:02-Dec-2016
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• When the GST bill was passed by the Rajya Sabha, Automobile industry welcomed it with both hands as it was expected to bring some good amount of changes on the pricing of the vehicles with the exemption of various indirect taxes.

But news on its implementation has raised some brows recently in the Automobile sector. Currently the small cars are being charged with a total tax of around 28% while the mid-size ones are charged with 39%. With the implementation of the GST, the taxes were expected to come down to 18% which would have been a huge relief for the automobile industry. Shockingly, this is not the case as all passenger cars would be charged at 28% irrespective of whether small or big.

GST rates will be implemented at four levels- 5%, 12%, 18% and 28% of which the passenger cars fall in the highest taxed category. After its implementation, small cars will not be having any fall in prices as expected earlier, as the new tax regime would be equal to the current excise and VAT put together. Small cars which are lesser than 4 meter in length with 1200cc engine (petrol) and 1500cc (diesel) would be charged at 28% GST as per the existing classification of cars.

• Luxury cars will bear a GST of 28% and an additional cess along with environment cess which may considerably increase the pricing of these particular segment cars. The present taxation for these cars stand at 50%, but the percentage of additional cess or the environment cess which will be implied along with the GST has not been announced yet. Also, the government has not classified the vehicles that fall under the luxury car segment which only can define the positive impact of this new tag regime. Until then it can only be assumed according to the existing classification that the vehicles greater than the 4 meter length would have new prices somewhat equal to the existing prices.



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