GST Impact 900 views
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.
Table of Contents
- 1 GST Impact on Small/Hatchback Cars
- 2 GST Impact on Car Prices in India
- 2.1 GST Impact on Maruti Suzuki Baleno
- 2.2 GST Impact on Hyundai Grand i10
- 2.3 Impact of GST on Mahindra KUV100
- 2.4 Impact of GST on Maruti Suzuki Swift/Dzire
- 2.5 GST Impact on Tata Tiago
- 2.6 GST Impact on Maruti Ignis
- 2.7 GST Impact on Nissan Micra
- 2.8 Impact of GST on Honda Jazz
- 2.9 GST Impact on Volkswagen Polo
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).
Below is a table showing cut in ex-showroom prices on various car models
|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||₹2,000|
|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|
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
|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
|GST||28% + Additional Cess of 1% (for Petrol) / 3% (for Diesel)||GST on Passenger Cars. Small Cars
|28% + Additional Cess upto 15%||Luxury Cars (GST + 15% 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.
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 your favourite hatchback car 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.