GST Impact on Cars or SUVs

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GST Impact on Cars or SUVs

The idea of launching this Good and Services Tax (GST) is to bring the brand as unifying the entire nation as one. It builds the whole market with one tax, instead of different rates and different taxes in the country. GST replaced VAT duty, the merge excise duty, CST and NCCD tax, and infrastructure cess as one entity. As GST introduced in India from July 2017, it has affected a lot of businesses. It also affects the car industry too, so there is too much confusion about increasing or decreasing the prices of the car across its different segments as compare to pre-GST rates. Under GST, vehicles are categorized into four categories like Small cars, large cards, electric vehicles, and hybrids. As an impact of GST, some of the vehicles become cheaper, but some become pricey. So let’s have a look at current GST Tax rates that will affect your buying decision of cars.

Current 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% 15.00% 43.00%
Luxury cars 28.00% 15.00% 43.00%
SUVs 28.00% 15.00% 43.00%
Hybrids 28.00% 15.00% 43.00%
Electric 12% 0.00% 12%

 

Highlights:

  • Car and SUVs which have internal combustion engines become cheaper.
  • After the GST introduced, hybrid cars become more expensive.
  • GST impact on the electric car makes them much cheaper as compare to earlier price rate.

The center of India will soon amend in the current cess of GST Act 2017, so there would be a hike in the compensation cess on mid-sized, SUVs, Luxury, and Large cars. GST proposes to increase the rate from 15% to 25%. As per the 20th meeting held on 5 Aug’27, Arun Jately minister of finance disclosed the plan of 10% hike in SUVs and Luxury cars on its cess. However, when to raise the cess, is still under discussion. Currently, the levy includes the 28% GST and adds up to 43%, which will rise to 53% for SUVs, once the law amended.

GST impact on Cars prices in India and It’s Comparison
Car Category Engine Capacity Examples Pre-GST Current GST Current GST Impact New GST Impact

Post 10% hike from 15% to 25% in Cess

(once the law amended)

All sub  4 metre vehicles Less than 1.2 L Petrol Maruti Alto, Baleno, i20, i10, polo, Tiago, Tata liva etc. 31.50% 28%+1% ▼ 2.50% as compare to pre GST No change
All sub  4 metre vehicles Less than 1.5 L diesel Maruti Suzuki Vitara, Brezza, Dzire, ford eco sprot etc 33.25 28%+3% ▼2.25% as compare to pre GST No change
All sub  4 metre vehicles More than 1.2 L Petrol and 1.5 L Diesel Ecosprots petrol, Hyundai i20 44.70% 28%+15% ▼1.70% as compare to pre GST ▲ Increase by 8.3 % as compare to pre GST
Larger than 4 metre More than 1.2 L Petrol and 1.5 L Diesel Honda City, Maruti ciaz, Mecedes-Benz E-class 52% 28%+15% ▼ 8.60% as compare to pre GST ▲ Increase by 1 % as compare to pre GST
All SUVs SUVs all brands 55% 28%+15% ▼ 12% as compare to pre GST ▼ Decrease by 2% as compare to pre-GST
Hybrid Cars Toyota Prius, Honda Accord, LexusES300h 30.30% 28%+15% ▲  13.3 % as compare to pre GST ▲ Increase by 23.3 % as compare to pre GST
Electric Cars Mahindra e2o, eVerito 20.50% 12% ▼  8.5% as compare to pre GST No change

 

 

If you wish to know more about GST transition, let’s connect with us at Infocrest (A financial consulting firm) and get your queries resolved. We have the team of professional, who are expert in creating the business plan as per the new regime in the country.

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