Home > What will be the Impact of GST on Cars Prices in India?

What will be the Impact of GST on Cars Prices in India?

Having talked about the Impact of GST on the Automobiles sector in our previous blog, we come down to the breakdown of how our pockets get affected in that aspect, by talking about the impact of GST on cars. If you’re thinking of buying a car post the new GST regime, here’s a look at what the scenario is going to look like, with a category wise break-up:

  • Petrol Engines Less than 1.2-litre: One of the largest and most popular segments in the country, previously was taxed at 31.5%, inclusive of excise duties and various added cess and VAT. Under the new regime, the total tax will come up to 29%, making the category cheaper by 2.5%.
  • Diesel Engines Less than 1.5-litre: The diesel variants of the popular category, were originally taxed at 33.25% but now under GST, will see a total tax of 31%, thus seeing a tax cut of 2.25 %.
  • Diesel Engines more than 1.5-litre/Petrol Engines more than 1.2-litre: The small section of cars which fall under this category, e.g. Ford EcoSport. Hyundai i10 etc. were previously charged 44.7% tax, post the new GST regime, they will now be charged 43%, making them marginally cheaper by 1.7%.
  • Petrol and Diesel Engines Irrespective of Displacement (Larger Cars not including SUVs): Including within them a large chunk of Sedans and larger hatchbacks, like Honda City, Mercedez Benz E/S Class, Mini 5-door etc., this segment was earlier taxed at 51.6%. Post the new GST structure, this segment will now be taxed at 43% hence, making a substantial 8.6% drop in taxes levied.
  • Petrol and Diesel Engines Irrespective of Displacement (SUVs): Containing with it larger SUVs like Ford Endeavour, Toyota Fortuner, Tata Hexa etc. this segment saw a tax structure of 55% earlier. Post the new GST structure, the segment will now be taxed at 43%, which make a huge cut of 12% in the tax levied, making it the biggest drop in any segment.
  • Hybrids Cars: Though a minuscule section of the Indian car scene, hybrid technology is quite popular globally. There are very few hybrid cars in the country like Toyota Prius, Toyota Camry Hybrid. etc. and the segment earlier saw a tax slab of 30%. The GST regime is not doing this segment any favors, as the new tax levied on this category is now 43%, making them 13.3 percent more expensive, which is quite a huge margin.
  • Electric Cars: Currently the only player in the market for fully electric cars is Mahindra Electric with its flagship cars Mahindra e2o and Mahindra e-Verito. This segment earlier saw a tax structure of 20.5% and post GST it will see a drop of 7.5%, cutting down the slab to 12.5%, thus, facilitating the creation of a market for electric cars in the country.

In summation, Ex-showroom prices for most cars except hybrids has gone down with the GST, with the price drop ranging from 2.25%-12%. The biggest advantage under the new tax regime lies with larger luxury cars and SUVs as they get a significant price cut. Tell us more about what you think about the impact of GST on cars, in the comments section below.

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