GST Cut On Cars: Most of the vehicles in the country’s market are sold during Diwali and Dhanteras. This time, this festival can be even more special for the automobile industry. Let us tell you that the government is likely to reduce the tax on many cars and two-wheelers from 28% to 18%. After which, there can be a huge drop in the prices of vehicles. However, the tax on luxury vehicles can remain high, which will be around 40%. If you are thinking of buying a car, scooter, or bike at this festival, then this can prove to be a great opportunity for you.
Customers can wait
Gaurav Vangal of S&P Global Mobility says that both customers and auto companies will benefit from the reduction in GST. But if the government reduces the tax on small vehicles and the other hand, increases the tax on long vehicles, then the benefit in prices can be reduced considerably. In such a situation, many customers may postpone purchases until the tax situation is clear, which may affect sales for a short time.
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Increasing demand will create employment
Primer Partners Vice President Nikhil Dhaka said that the tax cut can reduce the prices of entry-level vehicles by Rs 20,000 to Rs 25,000. This will increase the purchasing power of the common man, and the demand for vehicles will also increase. At the same time, a report by HSBC shows that even if the government’s revenue is affected initially, the increasing sales of vehicles will create new employment opportunities.
Maruti Suzuki will benefit greatly
Maruti Suzuki will benefit the most from the reduction in GST. The reason for this is that it leads to more sales of small cars in the portfolio, like Alto K10, Swift, Beleno, Celerio, Dzire, and WagonR. Along with this, Tata Motors and Hyundai Motor will also benefit more. All these cars are less than 4 meters in length. In two-wheelers, companies like Honda, TVS, Bajaj Auto, and Hero MotoCorp will get more benefits.
How much is GST on EV and hydrogen models
For information, let us tell you that the government already levies a 5 percent tax on battery-operated vehicles in the country’s market. No extra cess is levied on them. On the other hand, 12 percent GST is levied on hydrogen fuel models. Cess is also not charged on these. This can reduce their price significantly. On the other hand, customers of three-wheelers will get more benefits. The reason for this is that 28 percent GST is levied on all types of three-wheelers. On the other hand, a tax of 18 percent instead of 28 percent will bring down their prices significantly.
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How much GST is levied on two-wheelers
Apart from this, 28 percent GST is levied on two-wheelers. No cess is charged on this. Two-wheelers above 350 cc are charged 28 percent GST, along with a 3 percent tax is also levied. This makes the total tax up to 31 percent. If these vehicles are not kept in the luxury category, their prices may fall.
GST on vehicles of 4 meters in length
Let us tell you that 12% GST and 1% cess are levied on petrol, LPG, and CNG vehicles of 4 meters in length and 1200 cc. This makes the total tax on them 29%. On the other hand, 28% GST and 3% cess are levied on cars with a 1500 cc engine. Thus, the total tax reaches 31%.