GST Impact

How Much Car Prices would Hike Post GST Cess?

How Much Car Prices would Hike Post GST Cess?

Last Updated : Jan. 11, 2019, 5:41 p.m.

As Goods and Services Tax (GST) kicks in India, it would not be wrong to say that many people are interested in knowing what it has in store for them. The Council after fixing the rates of more than 1,200 items, came out with an announcement that many essential items such as consumer goods are expected to become cheaper, hence leaving a big smile on the faces of many. But wait a minute, because with the new GST structure the small car owners are not so happy. Yes, that’s right! The implementation of GST have a direct effect on the prices of automobiles. Talking about small cars in particular, their prices will more or less remain the same as there will be a minor hike in the duty under GST regime.

GST Cess: Honda, Toyota, Fiat and Others Hike Their Car Prices

In syn with the last update of GST Cess hike in cars, here comes another big news. Honda Cars India on Thursday hiked the prices of its various car models such as Honda City, Honda BR-V and Honda CR-V. The revised prices across models range between ₹7,003 and ₹89,069 and became effective from September 11. The Company in a statement said that due to hike in GST Cess by 2%-7%, Honda Cars India hiked its car prices. Talking about its models in detail, the mid-sized Sedan City is now costlier by ₹7,003 and ₹18,791 according to variants.

As far as other models of Honda are concerned, i.e. SUV BR-V and CR-V, their prices have been hiked between ₹ 12,490 and ₹18,242 and ₹ 75,304 and ₹ 89,069 respectively. Another automobile company who had joined the bandwagon earlier this week was Toyota Kirloskar Motor (TKM). The Japanese Automaker decided to share the increased burden of prices with its customers by announcing a price hike across its portfolio, including Innova Crysta, Fortuner, Corolla and Etios.

Talking about its different variants Toyota Etios will see a price hike of₹13,000, while Innova Crysta will go up by ₹78,000 across it’s all variants. When it comes to Toyota’s mid-size sedan, the prices of Corolla Altis will be hiked by ₹72,000. While on the other hand, Toyota Fortuner buyers now need to take out a huge sum of ₹1.60 Lakh more from their pocket to buy this model.

Well, all thanks to the hiked GST Cess, Fiat Chrysler Automobiles (FCA) India has also raised the prices of its Fiat and Jeep range vehicles. The prices of Fiat cars will witness a hike in the range of₹9,000 to ₹14,000. While on the other hand, its Jeep Compass models will see a revision of₹21,000 to₹72,000, depending on the variant you pick. Those who want to buy Jeep CBU, they need to take out more money from their wallet as the automobile company has increased the prices of its Jeep CBUs range by upto ₹2,75,000 to ₹6,40,000.

Following the footsteps of other automakers, Hyundai has also increased the prices of Elite i20, new Verna, Elantra, Tuscon, Creta and others. On the whole, a 2%-5% hike could be seen in the first four models in the ascending order. The 1.4-litre petrol version of the Elite i20 with automatic transmission has become dearer by ₹12,457, while the Creta and new Verna model prices have jumped by ₹20,900-55,375 and ₹29,090, respectively. Hyundai Tuscon and Elantra models, on the other hand, have seen a price surge of ₹64,828-84,867 and ₹50,312-75,991, respectively. The price rise is effective from September 11, 2017.

Jaguar India has also joined the price hike bandwagon by raising the prices of its XE, XJ, XF, F-Type and F-Pace models by ₹80,000-10,00,000.

GST Cess Hike in Cars: Mid-sized, SUVs , Luxury Cars to Be Expensive

The GST Council on 9 September decided to hike the cess on mid-sized, SUVs and luxury cars, effective from 11 September,2017. The cess is hiked by 2% on mid-sized cars, taking the effective rate to 45%. In case of luxury cars, the cess is hiked by 5%, making the rate to touch 48%. While in case of SUVs, the cess is hiked by 7%.

After the GST Council meet, Finance Minister Arun Jaitley had stated that in case of large vehicles where affordability ratio is high, the cess has been increased. He also said that the pre-GST rate has not been restored, even though there was room for hiking the cess by 10%, but the cess has been hiked by up to 7%.

Talking about small petrol & diesel cars, hybrid cars and those having the capacity to carry up to 13 passengers, rates on such cars remain unchanged. Under the GST regime, the cars now attract the highest tax slab of 28% along with a levied cess.

If experts are to be believed, under the new rates, some popular mid-sized cars such as Honda City, Maruti Suzuki Ciaz (petrol) and the newly launched Hyundai Verna will see a hike in prices by 2%. In addition to the same, luxury cars like BMW 3, 5 and 7 Series, Audi A3, A4, A6 and A8 along with Mercedes C Class, E Class and S Class will also be expensive by 5%.

While on the other hand, in case of SUVs, right from Scorpio and XUV500 of Mahindra & Mahindra, Renault Duster, Toyota Fortuner to luxury ones like Land Rover Discovery Audi,Q3, Q5 and Q7, BMWX3, X5 along with Mercedes GLA, GLC and GLS will see a price hike by up to 7%.

GST Cess Hiked to 25%:SUVs, Luxury Cars to Cost More

Get ready to pay more for Sport Utility Vehicles (SUVs), mid-sized, large and luxury cars as the GST council has approved a proposal on 7 August to hike the cess from 15% to 25%.That’s right! According to new GST regime, these cars will attract the top tax rate of 28% along with a cess of 1%-15% to create a corpus to compensate the States for loss of revenue generated from the GST implementation. However, the decision on when to implement the actual cess is yet to be taken by the GST Council. The Finance Ministry in a statement said that after the introduction of GST, the total tax on motor vehicles (GST plus compensation cess) has come down vis-a-vis the total incidence in the pre-GST regime.

The Council recommended that the Central Government may move the legislative amendments required for an increase in the maximum ceiling of cess leviable on vehicles falling under heading 8702 and 8703, including mid-segment, large cars, SUVs and motor vehicles which can carry more than 10 persons but less than 13. In fact, hybrid vehicles with engine capacity of less than and more than 1500cc respectively also fall into this category.

Talking about the GST rollout on July 1, the prices of most SUVs were then slashed between₹1.1 Lakh and₹3 Lakh, which subsumed over a dozen central and state levies like excise duty, service tax and VAT. While all cars will attract a peak GST rate of 28%, large motor vehicles, SUVs, mid-segment, large, hybrid cars and hybrid motor vehicles attract a cess of 15% on top of it. In addition to this, small cars of less than 4 meters and 1200cc will attract a cess of 1%. While on the other hand, small diesel cars of less than 4 meters and 1500cc will levy a cess of 3%.

GST Impact on Small/Hatchback Cars

Yes, the small car buyers will not see much of a difference in prices as a GST of 28% plus 1% cess for petrol cars (and 3% for diesel) won’t be much of a change if we look at the existing effective tax rate of 29% (VAT plus excise plus cess) on small cars. So, you can say that the duty on small cars will go up only marginally, thus may not translate into a price hike. According to new tax structure each category will be levied with a 28% tax rate as standard along with an additional cess which is also going to be warranted depending upon the category of the vehicle. However, with GST being implemented, there is no denying the fact that auto-manufacturers has started offering the benefits to the customers by giving them huge discounts.

Yes, that’s right! Joining the bandwagon are the two renowned automakers-Honda Cars India and Ford India, who announced the price cut on various models arising out of Goods and Services Tax (GST). If we talk about the Honda Cars India Limited, the company has today announced the price cut on its many car models by up to ₹1.31 Lakh. Talking about the specific car model, the company has slashed the prices of its hatchback Brio model by up to ₹12,279 and Sedan Amaze by up to ₹14,825. Not only this, Honda has also reduced the prices of its premium hatchback Jazz by up to ₹10,031 along with its recently launched model WR-V by up to ₹10,064.

Similarly, the prices of mid-sized Sedan City has also been reduced, ranging from ₹16,510 to ₹28,005. Not only this, company’s SUV BR-V and premium SUV CR-V prices will also come down by up to ₹30,387 and ₹1,31,663 respectively. However, the revised price list is for ex-showroom Delhi, thus the prices will vary from State to State.

Moreover, coming to Ford India, the automobile company has also reduced the prices of its vehicles by up to 4.5%, offering the highest rate cut in Mumbai for its flagship SUV Endeavour by up to ₹3 Lakh. Well, the price cut can be seen in the range of ₹28,000 on Figo and ₹3 Lakh on Endeavour in Mumbai city.

Talking about Delhi, the company has reduced the prices of its hatchback Figo by up to ₹2,000 and compact SUV Ecosport by up to ₹8,000. While on the other hand, the prices of its Premium SUV Endeavour has also been cut by up to ₹1.5 Lakh.

If other brands are reducing their car prices, how can Korean auto major Hyundai be left behind? Yes, that’s right! This automobile company has also reduced its prices by up to 5.9% in order to pass on the GST benefits to the customers. However, the quantum of reduction will differ, depending upon the model of the car and state of purchase. Not only this, Nissan Motor also said that it is reducing the ex-showroom prices of its vehicles by up to 3%. Well, if we talk about other auto-makers, Skoda has also offered a price benefit of up to ₹ 2.4 Lakh with a revision of up to 7.4%. Talking about its Octavia model, its range varies from 4.9%-7.4%, resulting in a price cut of up to ₹1.75 Lakh. Apart from this, another leading name, Tata Motors too has slashed the prices of its commercial vehicles (cargo) and (passenger transportation) in the range of 0.3%-4.21% and 0.6%-8.2% respectively.

Fiat Chrysler Automobile (FCA) India Pvt. Ltd is also giving the GST benefits to the customers by offering a price cut on its wide range of vehicles. Yes, that’s right! The automobile company has also slashed the prices of a number of its jeep model range by up to ₹ 18.49 Lakh. Talking about its diesel powered Wrangler (Unlimited), the Company has reduced the prices of the same by ₹7.14 Lakh-₹64.45 Lakh as compared to its earlier price of ₹71.59 Lakh. The price of Grand Cherokee(Limited) diesel has also reduced by ₹18.49 Lakh to ₹75.15 Lakh from ₹93.64 Lakh earlier.

Not only this, its diesel powered Grand Cherokee (Summit) has also witnessed the price cut of ₹18.24 lakh to ₹85.15 lakh from ₹1.03 crore. Besides this, FCA has also lowered the price of Grand Cherokee SRT by ₹5 Lakh to ₹1.07 crore. However, the Company kept the price of Wrangler Unlimited Petrol unchanged at ₹56 Lakh. In fact, Company also surprised the customers by announcing the launch of Grand Cherokee Petrol in India worth ₹75.15 Lakh(ex-showroom price, New Delhi).

Take a look at the table below, showing ex-showroom prices of the cars mentioned above.

Brands/Models Cut in Ex-showroom Price (Delhi)
Honda Brio
Up to ₹12,279
Honda Amaze
Up to ₹14,825
Honda Jazz
Up to ₹10,031
Honda WR-V
Up to ₹10,064
Honda City
₹16,510 - ₹28,005
Honda SUV BR-V
Up to ₹30,387
Honda SUV CR-V
Up to ₹1,31,663
Ford Figo
Ford SUV Ecosport Up to ₹8,000
Ford SUV Endeavour Up to Rs 1.5 lakh
Fiat Jeep Wrangler (Unlimited) Diesel ₹7.14 lakh to ₹64.45 lakh
Fiat Jeep Grand Cherokee (Limited) Diesel ₹18.49 lakh to ₹75.15 lakh
Fiat Jeep Grand Cherokee (Summit) Diesel ₹18.24 lakh to ₹85.15 lakh
Fiat Jeep Grand Cherokee SRT ₹5 lakh to ₹1.07 crore

*The ex-showroom prices of the cars stated above were updated on 21st July, 2017.

Well, not only this, for your reference below is a table showing Pre and Post GST Tax Scenario on Car Prices in India.

Pre GST Tax Scenario

Component Rate Classification
Excise Duty 12% Small Cars under 4 Meter
24% Cars with Length > 4 Meter but Engine < 1.5 Litre
27% Cars with Engine > 1.5 Litre but Ground Clearance less than 170 mm
30% High Capacity Cars and SUV Cars with Ground Clearance > 170 mm
Infrastructure Cess 1% Petrol Cars with Engine < 1.2 Litre
2.5% Diesel Cars with Engine < 1.5 Litre or Petrol Cars with Engine between 1200cc to 1500cc
4% High Capacity Petrol or Diesel Cars with Engine > 1.5 Litre
National Calamity Contingency Duty 1% Across All Cars
VAT 12.5% to 14.5% State to State irrespective of Vehicle Class
Octroi / Entry Tax 4% to 5% Some States charges additional Octroi as Entry Tax. Like Mumbai has 4.5% LBT
Road Tax 3% to 24% Based on Vehicle Pricing - Differential in every State

Post GST Tax Scenario

Component Rate Classification
GST 28% + Additional Cess of 1% (for Petrol) / 3% (for Diesel) GST on Passenger Cars. Small Cars
28% + Additional Cess upto 20% Luxury Cars (GST + 20% Additional Cess)
Road Tax 3% to 24% Based on Vehicle Pricing - Differential in every State

But here comes the big question, what GST has in store for you? Let’s elaborate the same, i.e. how this new GST regime is going to impact a common man’s life if he/she is willing to own a vehicle via car loan? When it comes to car loans, almost every charge includes the service tax. Talking about the processing fee, it can be 1%-2% of the loan amount. While on the other hand, prepayment charges remain constant at 2%-6% of the principal outstanding. However, post GST, a 18% tax rate will be applicable on the charges and other that are levied on a car loan. If experts are to be believed, the loan costs are expected to increase with respect to GST.

Apply for Car Loan After GST

GST Impact on Car Prices in India

If we look at the other side, GST is no doubt a boon for those who are willing to buy luxury cars as their prices are expected to go down by 2%-6% due to the reduction in the overall tax incidence by about 7%-12%. But what about the middle income group? Those who can only afford small or hatchback cars? Be it Suzuki Baleno, Grand i10, Renault Kwid or Honda Jazz, no matter which type of car you are interested in buying, here is a detailed segment wise analysis of how GST is going to affect car prices in India.

So, take a look below to know more about most searched cars with pre and post GST updates.

GST Impact on Maruti Suzuki Baleno

With its contemporary design, stylish exterior features and smart equipment, it would not be wrong to say that Baleno is one of the best selling premium hatchbacks of India. If we talk about its ex-showroom price, this stylish car ranges between ₹5.28-₹8.43 Lakh. Now after taking GST into consideration, the price of small cars will rise by 1%-2%. Suppose if the price rises by 2%, thus the post GST price of Baleno will be ₹5,38,560-₹8,59,860, which means you need to pay ₹10,560-₹16,860 more from your pocket to buy this car.

GST Impact on Hyundai Grand i10

Smart exterior features along with a roomy cabin makes Hyundai Grand i10 one of the most selling small cars in India. This car comes with advanced comfort and convenience features, costing you a sum of ₹4.62-₹7.37 Lakh. Let’s say if the price of the car post GST will be increased by 2%, this car will cost you around ₹4,71,240-₹7,51,740. So, an additional amount of ₹9,240-₹14,740 will be paid by you to avail this car.

Impact of GST on Mahindra KUV100

Available in dazzling body colours along with a metallic black roof, this hatchback car is a favorite of many, Making it one of the best selling cars in the country. Currently, this car costs you around ₹4.58-₹7.36 Lakh, which means say if 1% increased GST will be implemented on the same, the price of the car post GST will be ₹4,62,580- ₹7,43,360, hence making a hole in your pocket as you need to pay ₹4,580 -₹7,360 extra.

Impact of GST on Maruti Suzuki Swift/Dzire

This stylish and appealing car with its widest range of features appeals to many, hence is one of the best selling hatchbacks in India. Talking about its price, this car is available to you at a price range of ₹4.76-₹7.47 Lakh. Suppose, if the GST rate will be increased by 1.50% and implemented on the same car, post GST the price of the car will be ₹4,83,140-₹7,58,205. You need to pay an extra sum of ₹7,140-₹11,205 from your pocket to buy this car.

GST Impact on Tata Tiago

Comes with an automated manual transmission, Tata Tiego is undoubtedly one of the best selling budget cars in the country. With its well equipped features and excellent design, this car is a dream car of many and is currently available to you at a price range of ₹3.2-₹5.39 Lakh. Now, if we look at the GST scenario, and assume that an increased rate of 1% will be implemented, the cost of the car would be ₹3,23,200-₹5,44,390, hence an extra amount of ₹3,200 -₹5390 will be paid by you.

GST Impact on Maruti Ignis

Known for giving the best comfort and performance, Maruti Ignis is also one of the top selling hatchbacks being current available at a price range of ₹4.59 Lakh-₹7.8 Lakh. Let’s say if the prices increase by 2%, this stylish car would cost you around ₹4,68,180-₹7,95,600, i.e. more burden will be on your pocket to pay the increased amount of ₹9,180-₹15,600.

GST Impact on Nissan Micra

With features like automatic rain-sensing wipers and automatic headlights, this car is surely one of the most popular hatchbacks in India. Available at a price of ₹5.99 Lakh- ₹7.23 Lakh, this classy car is here to stay. Suppose, if a hiked GST rate of 1% is implemented on the car, it is going to cost you around ₹6,04,990-₹7,30,230, allowing you to pay ₹5,990-₹7,230 extra to buy the same car.

Impact of GST on Honda Jazz

Safety, comfort and performance what more you can ask from one of the most popular hatchbacks in India. We are talking about stylish and beautiful Honda Jazz which is currently available at a range of ₹5.96-₹9.28 Lakh. Taking GST into consideration, suppose if the rates increase by 1.50%, this car post GST will be ₹6,04,940-₹9,41,920. Yes, you need to pay ₹8,940-₹13,920 extra to get this brand new car.

GST Impact on Volkswagen Polo

This car has always been in demand due to its sleek design and appealing look, hence making it one of the top selling hatchbacks in India. With price starting from ₹5.45-₹9.81 Lakh, this car grabs the attention of many. But, just imagine if the increased GST rate of 2% will be implemented on the same car, the cost of the car will be increased by ₹5,55,900-₹10,00,620, i.e. you need to pay ₹10,900-₹19,620 extra from your pocket.

*The price estimation of the cars stated above were updated on 4th July, 2017.

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