After a freefall of more than a year, Indian automakers are now expecting the government to pitch in with new fiscal incentives to make cars cheaper and neutralize the effect of using the precious BS-VI emission technology as we go into the next financial year. Get to understand all about GST tax consequences on your car.
They have requested the government to cut GST on vehicles by 10 per cent to make it down to the primary slab of 18 per cent from the current 28 per cent. All passenger and commercial vehicles sold in India will be BS-VI from 1st April and are expected to be dearer by 5-10 per cent.
Automakers say that this would lead to an 8 – 10% additional cost to the customer on the road price because of which overall GST collections for the government will improve. Nevertheless, this additional cost may lead to a fall in order.
“As a win-win trade, we ask the government to review reducing GST on BS-VI vehicles to 18 per cent from the prevailing 28 per cent from 1st April onwards,” a senior automotive official said.
What is GST?
GST stands for Goods and Services Tax, and a uniform indirect tax levied on the consumption and sales of goods and services throughout the country. GST is a change in the tax that is forced when a person buys any goods or services. It will take all multi-stage taxes in the country set by the states and the centre.
Which taxes are going to die when GST comes?
Various types of taxes are forced by the state government and the central government on assets and services. The principal taxes are entertainment tax, service tax, central value-added tax (CENVAT), income tax, excise duty, and security transaction tax.
Where we stand in implementing GST?
It was expected to get GST implemented from 1st April 2017, but it got stuck in the Rajya Sabha and waiting for the approval. GST is back in the market with a hope of its support in the monsoon session of parliament. If it gets through the monsoon session, it is expected to come into effect next year.
If GST gets implanted in India, there will only be a single tax, and the taxation on goods and services will get easier.
What is for the Auto market?
The auto industry of the nation will be receiving most of the profits. The market is assuming a GST of 18%. Here are the acute effects of the implementation of GST:
- The prices of small cars with engine size less than 1500 cc and a length less than 4 meters will decrease by 7 per cent as GST is likely to be at 18 per cent of the cars’ ex-showroom price. Currently, it is 24 per cent. The cars receiving interest rates will be Tata Tiago, Maruti Suzuki Swift, Ford Figo, Datsun Go, Celerio, Ritz, Alto, Hyundai Grand i10, Chevrolet Beat, and many more.
- The price of medium-size cars having the engine’s size is less than 1500 cc, and length more than 4 meters is expected to increase by 6 per cent. The GST will be around 40 per cent for this segment that is currently 34 per cent.
- The large cars having engine size more than 1500 cc will not get affected as the GST will remain at 30 per cent. So, the price will not change.
It decides that India’s leading carmaker Maruti Suzuki will be making positive effects of GST implementation as they have the maximum number of the cars falling into the first level. So, if you plan to buy a car in the coming days, analyze the GST effects and choose then. If you plan for a mid-sized car like Baleno or Elite 20, it’s better not to postpone your decision for the next year.
The production has likewise requested to take the discount price on passenger means and two-wheelers to 25 per cent (from the current 15 per cent) and have discount adjusted to the car’s real useful life. Meanwhile, the government had increased by 30 per cent discount till 31st March as an interim measure to boost trade.
Amongst other reasons have been automakers also need the government to forever withdraw the recommended hike in the vehicle registration fee that would more impact the demand negatively and implement income tax benefit on the new part of vehicle loan to individuals buying greener cars such as fuel cell, PHEVs, CNG, LPG, Ethanol, Methanol, etc.
Apply for a car loan at Dialabank
Read Other Related Articles
|Things Your Credit Card Company Should Tell You||Evolution of Credit Cards|
|Online Credit Card||Festive Shopping!|
|Maximize Credit Card gains with smart steps||Credit Cards|
|Selecting the Best Credit Card Offer||Credit Card Misuse|