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Impact of GST On Car Prices In India

Modified On Sep 18, 2017 12:39 PM By Jagdev

Cars now cheaper than before. Service charge on insurance and loans up from 15 per cent to 18 per cent

Latest Updates:

Sep 11, 2017: Cess on SUVs, luxury cars and mid-size cars increased by 7 per cent, 5 per cent and 2 per cent, respectively. Details here.

Aug 07, 2017: GST Council has proposed a revision in tax slabs for motor vehicles. Until now, all cars were taxed at a base rate of 28 per cent and were levied an additional cess based on factors like dimensions, engine size and ground clearance. The cess slabs were fixed at - 1%, 3% and 15%. The GST Council has now proposed another cess slab of 25%. If this slab is passed, then the maximum rate at which cars could be taxed will increase from 43 per cent to 53 per cent. It's likely that SUVs and luxury cars will be taxed under the newly proposed highest slab. Read more about the GST Council's proposal here.

Aug 30, 2017: The Cabinet has given its nod to the tax slab revision so the prices of SUVs and luxury cars are bound to increase. The increase in cess will be applicable from a later decided, which the GST Council will decide in their September 9, 2017 meeting. The GST on luxury cars and SUVs will now be set at 53 per cent instead of the existing 43 per cent.

Goods & Service Tax (GST) has now replaced all multiple state and centre taxes like excise, NCCD, infra cess, CST, VAT, etc. The implementation of GST has brought some good news for new car buyers. In almost all parts of the country, all cars barring hybrid vehicles have become more affordable than before.

It should also be noted that there will be some increase in insurance costs and loan EMIs as service tax has been increased from 15 per cent to 18 per cent. Also, cars belonging to the small and mid-size segment were expected to get slightly costlier than before. However, prices of most Maruti Suzuki cars belonging to these segments have either come down or remained as is.

Worth noting is the fact that hybrids are now attract 43 per cent GST, lesser than mid-size cars, luxury cars and SUVs. It's, however, significantly higher than before. The increase in taxes will hurt hybrid vehicles the most in cities like Delhi where these vehicles previously enjoyed lower VAT rate (5 per cent) and excise duties (12.5 per cent).

Cars are considered as luxury goods under GST hence they fall in the 28 per cent tax slab. Over and above, based on vehicle classification there is an extra cess of 1, 3, 15, 17, 20, and 22 per cent.

Post GST Tax Rates

Base

Cess

Net

Small cars

Petrol

28.00%

1.00%

29.00%

Diesel

28.00%

3.00%

31.00%

Mid-size cars

28.00%

17.00%

45.00%

Luxury cars

28.00%

20.00%

48.00%

SUVs

28.00%

22.00%

50.00%

Hybrids

28.00%

15.00%

43.00%

Electric

12%

0.00%

12%

Let’s consider a few cars to see the impact of GST on ex-showroom prices in Delhi and Mumbai.

1. Small Car (petrol) - Maruti Suzuki Alto 800

Maruti Suzuki Alto 800

Pre-GST ex-Delhi

Post GST ex-Delhi (in Rs)

% change

STD

Rs 2.50 lakh

Rs 2.49 lakh

-0.4%

Maruti Suzuki Alto 800

Pre-GST ex-Mumbai

Post GST ex-Mumbai

% change

STD

Rs 2.74 lakh

Rs 2.61 lakh

-4.74%

2. Small Car (diesel) - Maruti Suzuki Dzire

Maruti Suzuki Dzire

Pre-GST ex-Delhi

Post GST ex-Delhi (in Rs)

% change

ZDi+ AGS

Rs 9.41 lakh

Rs 9.39 lakh

-0.21%

Maruti Suzuki Dzire

Pre-GST ex-Mumbai

Post GST ex-Mumbai

% change

ZDi+ AGS

Rs 9.85 lakh

Rs 9.32 lakh

-5.38%

3. Mid-size Car - Maruti Suzuki Ciaz (petrol)

Maruti Suzuki Ciaz

Pre-GST ex-Delhi

Post GST ex-Delhi (in Rs)

% change

Sigma

Rs 7.72 lakh

Rs 7.65 lakh

-0.91%

Maruti Suzuki Ciaz

Pre-GST ex-Mumbai

Post GST ex-Mumbai

% change

Sigma

Rs 8.31 lakh

Rs 7.83 lakh

-5.78%

4. Luxury Car - Toyota Corolla Altis (petrol)

Toyota Corolla Altis

Pre-GST ex-Delhi

Post GST ex-Delhi (in Rs)

% change

1.8 VL CVT

Rs 19.91 lakh

Rs 19.36 lakh

-2.76%

Toyota Corolla Altis

Pre-GST ex-Mumbai

Post GST ex-Mumbai

% change

1.8 VL CVT

Rs 20.99 lakh

Rs 19.62 lakh

-6.52%

5. SUV - Toyota Fortuner

Toyota Fortuner

Pre-GST ex-Delhi

Post GST ex-Delhi (in Rs)

% change

2.8 4WD AT

Rs 31.86 lakh

Rs 31.47 lakh

-1.22%

Toyota Fortuner

Pre-GST ex-Mumbai

Post GST ex-Mumbai

% change

2.8 4WD AT

Rs 32.85 lakh

Rs 31.91 lakh

-2.86%

6. Hybrid Car - Toyota Camry

Toyota Camry

Pre-GST ex-Delhi

Post GST ex-Delhi (in Rs)

% change

2.5 Hybrid

Rs 31.98 lakh

Rs 37.23 lakh

16.42%

Toyota Camry

Pre-GST ex-Mumbai

Post GST ex-Mumbai

% change

2.5 Hybrid

Rs 36.35 lakh

Rs 37.94 lakh

4.37%

For reference, cars in India are classified on the following criteria:

1. Small cars – Cars under four-metre length powered by a petrol engine not greater than 1.2-litre or a diesel engine not greater than 1.5-litre by displacement

2. Mid-size cars – Cars over four-metre length powered by either a petrol or a diesel engine not greater than 1.5-litre displacement

3. Luxury cars – Cars over four-metre length powered by either a petrol or a diesel engine that is greater than 1.5-litre displacement

4. SUVs – Cars over four-metre length and 170mm ground clearance powered by either a petrol or a diesel engine that is greater than 1.5-litre displacement

Impact of GST on Maruti Suzuki Cars

Maruti Suzuki has dropped prices of its cars by up to 3 per cent. The carmaker has also reduced prices of some of its hatchbacks in Delhi despite a slight increase in tax burden in the capital city. In Mumbai, prices of Maruti Suzuki’s small cars are considerably lower than before with a drop of up to Rs 18,000 in the prices of the Alto range. Baleno RS sees the maximum price drop in the Maruti Suzuki range in Delhi (Rs 32,000) as well as in Mumbai (Rs 78,000).

Maruti Suzuki’s SHVS powered cars are the worst hit by GST throughout the nation. The government’s decision to not offer any benefits on hybrid cars is the reason. So, while the Ciaz SHVS is about half a lakh rupee costlier in Mumbai, prices of the car have gone up in Delhi by almost one lakh rupees. Find out in detail about GST impact on Maruti Suzuki cars in India.

Impact of GST on Hyundai Cars

Prices of Hyundai cars have also come down. The drop is significant for cars that cost over Rs 20 lakh like the Tucson and SantaFe. For smaller cars like the Grand i10 and Elite i20, ex-showroom prices have come down by up to Rs 10,000 in New Delhi. The price drop is higher in Mumbai in comparison. Check out the post-GST price drop on all Hyundai cars here.

Impact of GST on Nissan-Datsun Cars

Post GST, Nissan-Datsun have announced one ex-showroom price throughout India with the exception of J&K. Price drop is not too significant for the Japanese duo. You can check out the price drop for Nissan-Datsun cars here.

Impact of GST on Renault Cars

Renault announced up to 7 per cent reduction in prices of their cars post GST. Prices for various variants of the Kwid are also lower than before. Read in detail about Renault's post GST price revision here.

Impact of GST on Ford Cars

Ford has dropped prices of their cars by up to 4.5 per cent. As a result, Ford Endeavour's prices have come down by about Rs 3 lakh in Mumbai. The price revision in Delhi is somewhat less, but that's a general case since cars in Delhi were taxed at a lesser rate previously. Check out the post GST change in prices of Ford cars here.

Impact of GST on Honda Cars

Like other carmakers, Honda has also reduced prices of all its cars in India. The company is, however, yet to announce the price of Accord Hybrid. GST has not been particularly good for hybrid cars that are now taxed higher than before. Check out the post GST prices of all Honda cars here.

Impact of GST on Toyota Cars

Toyota has a variety of cars in its portfolio ranging from the Liva to the Land Cruiser. As a result, the bracket of price drop post GST is also massive. Toyota, alongside Maruti Suzuki, is one of those carmakers whose hybrid models have seen a mega price increase. The Camry hybrid, which used to cost around Rs 32 lakh (ex-showroom Delhi) before GST now costs Rs 37+ lakh. Know more about the post-GST prices of all Toyota cars in detail here.

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