After Prime Minister Narendra Modi’s speech on August 15, talks have increased about the new GST slab. Now it is expected that along with many daily use items, tax rates on small vehicles can also be reduced. The Chamber of Trade and Industry (CTI), the main traders’ group of Delhi and the country, has asked the Prime Minister to cut GST on small vehicles from 28% to 18%. For this, CTI Chairman Brijesh Goyal has written a letter to PM Modi. Brijesh Goyal said that if GST is reduced to 18% instead of 28%, then car prices can fall by ₹50,000 to ₹70,000. This will make it easier for common people to buy cars.

How Tax Cut Will Help Buyers

For example, if the ex-showroom price of a car is ₹6 lakh, then with the current 28% tax, its price becomes about ₹7.74 lakh. But if the tax is reduced to 18%, the same car can be bought for about ₹7.08 lakh. This means the customer will save around ₹66,000 directly.

CTI Vice President Rahul Adalkha and Rajesh Khanna also supported this demand. They said that the tax cut will not only make cars cheaper but will also increase the number of first-time car buyers. This will help the small car market grow and give relief to common people.

Traders said the government should make the tax structure simple and in public interest. This will help the economy and also give direct benefit to people.

GST Cut on Cars

HSBC said that under the new system, the government may cut tax on small cars from 28% to 18%. For big cars, a special rate of 40% may be added, but the cess could be removed.

If this change happens, the price of small cars may fall by about 8%. Big cars may become cheaper by 3–5%.

The report also said that all two-wheeler companies will gain if GST is reduced. Indian companies may benefit more. But the government may lose about USD 4–5 billion in GST collection in this case.

The report also talked about another option, though less likely. In this option, GST may be cut from 28% to 18% for all cars. The cess will stay, but the prices of all cars may fall by 6–8%.

If GST is cut by 10% on all cars, the government may lose USD 5–6 billion in revenue.