How will GST Impact the Automobile Industry? New Rates and Categories
Much has already been said, but there is still a lot to understand about the recently implemented Good and Service Tax (GST). GST has been brought into action from 1st July 2017 and it is being termed as one of biggest economic reforms of independent India.
Cars After GST
GST seems to be beneficial for both big and small car makers of the country as prices of all cars have dropped. Now that GST has replaced all the other types of taxes such as Excise Duty, NCCD (National Calamity Contingency Duty), CST (Central Sales Tax), Infra Cess and VAT (Value Added Tax which varied from one state to another), it turned out to be a good news for both the sellers and the buyers.
Per the new taxation system, larger cars such as SUVs, MPVs and even supercars have witnessed some alluring price cuts. Some of the exotic cars that are available in the market have witnessed a price reduction of as much as Rs 1 crore while some of the affordable cars like the Tata Hexa have witnessed a price drop of over Rs two lakh (Woo!). While structuring GST, cars have been taxed on two parameters, GST, and additional cess. Here the additional cess varies for different categories while GST remains at a constant 28%.
While small petrol cars have been taxed at 29%, small diesel cars are now available at 31%. Cars that are categorized in the above four meters in length but have an engine capacity of lower than 1,500 cc, above four meters and over 1,500 cc, SUV and Hybrid will now be taxed at 43%.
Take a look at the tax rate post implementation of GST.
|Post GST Tax Rates|
|Base GST||Cess Rate||Net Rate|
Good, Bad, Eh!
Well, the importers/dealers are expected to be benefitted from the new taxation system as they would be able to claim the GST that is paid on goods imported/sold wherein earlier, they could not have claimed the excise duty and VAT paid. Excise paid on the stock transfer will also be covered by IGST under the new GST law. The advance taken for the supply of goods will also be taxed under GST. GST is expected to help the manufacturers in procuring auto parts at a lower cost due to an improved supply chain mechanism under GST.
The final rates for the have been declared for the different kind of automobiles. As per expectations, the GST on car and bikes are kept under the 28% bracket and a list of cess to be levied on a different kind of automobile has also been declared by the government of India. Cess has been implied on different kind of automobiles starting from 1 to 15%.
So if you were thinking about getting a car, now is the time! Good luck.http://www.khbuzz.com/2017/07/16/will-gst-impact-automobile-industry-new-rates-categories/http://www.khbuzz.com/wp-content/uploads/2017/07/Impact-of-GST-on-Cars.jpghttp://www.khbuzz.com/wp-content/uploads/2017/07/Impact-of-GST-on-Cars-150x150.jpgAutomobilesCarIndiaNewsAutomobile Industry,GST,GST on Cars,Impact of GST