If you really think about it, it's easier getting a loan for a car than a loan for bus fare!
GST is undeniably one of the most significant reforms made to the tax structure of the country in recent times. The Goods and Services Tax Bill was a vehicle for the government to create a uniform tax structure throughout the country. This indirect tax replaced several cascading taxes levied by the state governments and the centre. GST is governed by a GST Council with the Finance Minister of India as its Chairman. The launch of GST was during a midnight session of both houses of parliament on 30 June 2016.
With the impending implementation of the much-awaited Goods and Services Tax (GST) regime, the entire community of prospective car-owners had been speculating on making the purchase ahead of time or not. News of possible benefits and price cuts post GST had fuelled the uncertainty in the market. The general impression was that prices for most car models were set to decrease from 1 July 2017, after the GST system came into effect. This had made several car-buyers postpone their purchase till the new tax structure was effective.
Now that the Goods and Services Tax system is live, car companies have declared price cuts (as anticipated) on certain models of vehicles. Some models have turned out to be more expensive, as well.
To summarise, the change in tax rates across segments is as shown in the table below:
| Electric Car Specifications | ||||
|---|---|---|---|---|
| Category | Engine | Pre-GST | Post-GST | Price Drop |
| Under 4 metres | Under 1.2 litre petrol | 31.5% | 29% | 2.5% |
| Under 4 metres | Under 1.5 litre diesel | 33.25% | 31% | 2.25% |
| Under 4 metres | Above 1.2 litre petrol or 1.5 litre diesel | 44.7% | 43% | 1.7% |
| Above 4 metres | Above 1.2 litre petrol or 1.5 litre diesel | 51.6% | 43% | 8.6% |
| SUVs | Â | 55% | 43% | 12% |
| Hybrids | Â | 30.3% | 43% | - 12.7% |
| Electric Vehicles (EVs) | Â | 20.5% | 12% | 8.5% |
Post GST implementation, several car manufacturers have passed on the reduction in tax rates to customers. In fact, lucrative discounts were offered by Maruti, Hyundai, Honda, Ford, etc. before GST implementation, in an attempt to counter the low demand during those days. Following the announcement of the new tax structure, the actual change in car prices are as described below:
Maruti Suzuki, India’s largest carmaker has offered GST rate benefits to its customers. The ex-showroom prices of its models have reduced by about 3%. However, the hybrid vehicles from the Maruti Suzuki range have seen a price hike. The current cost of Maruti cars are as shown in the table below:
| Maruti car prices 2018 | ||
|---|---|---|
| Model | Pre-GST price (ex-showroon, Delhi) | New price (ex-showroon, Delhi) |
| Alto 800 | Rs.2.51 lakh - Rs.3.76 lakh | Rs. 2.46 lakh – Rs. 3.70 lakh |
| Vitara Brezza | Rs. 7.26 lakh – Rs. 9.66 lakh | Rs. 7.22 lakh – Rs. 9 lakh |
| Ignis | Rs. 4.59 lakh – Rs. 7.80 lakh | Rs. 4.50 lakh – Rs. 7.70 lakh |
| Ciaz (Petrol) | Rs. 7.73 lakh – Rs. 10.52 lakh | Rs. 7.45 lakh – Rs. 10.24 lakh |
Hyundai India, the second-largest carmaker in the country is providing discounts on various models in their range of vehicles. The cost of these vehicles before and after the GST regime are detailed below:
| Hyundai car prices 2018 | ||
|---|---|---|
| Model | Pre-GST Price (ex-showroon, Delhi) | New Price (ex-showroon, Delhi) |
| Grand i10 | Rs. 4.63 lakh – Rs. 7.38 lakh | Rs. 4.53 lakh – Rs. 7.28 lakh |
| Elite i20 | Rs. 5.37 lakh – Rs. 9.09 lakh | Rs. 5.24 lakh – Rs. 8.96 lakh |
| Verna | Rs. 7.96 lakh – Rs. 13.17 lakh | Rs. 7.68 lakh – Rs. 12.89 lakh |
| Creta | Rs. 9.29 lakh – Rs. 14.64 lakh | Rs. 8.10 lakh – Rs. 13.54 lakh |
Tata Motors is offering cost rebates on various models, including their latest entrant into the Indian automobile scene, Tata Hexa. The price range for Tata cars before and after GST are as shown in the table below:
| Tata car prices 2018 | ||
|---|---|---|
| Model | Pre-GST Price (ex-showroon, Delhi) | New Price (ex-showroon, Delhi) |
| Tiago | Rs. 3.30 lakh – Rs. 5.85 lakh | Rs. 3.22 lakh – Rs. 5.76 lakh |
| Tigor | Rs. 4.70 lakh – Rs. 7.09 lakh | Rs. 4.59 lakh – Rs. 6.98 lakh |
| Safari Storme | Rs. 10.64 lakh – Rs. 15.63 lakh | Rs. 9.83 lakh – Rs. 14.81 lakh |
| Hexa | Rs. 11.99 lakh – Rs. 17.66 lakh | Rs. 10.49 lakh – Rs. 16.16 lakh |
Mahindra is another popular brand in the Indian automobile domain. Most of the vehicles in their range are larger cars that have greatly benefitted from the implementation of GST. Following are the approximate drop in prices across the Mahindra car models:
| Mahindra car prices 2018 | ||
|---|---|---|
| Model | Pre-GST Price (ex-showroon, Delhi) | New Price (ex-showroon, Delhi) |
| KUV100 | Rs. 4.58 lakh – Rs. 6.92 lakh | Rs. 4.48 lakh – Rs. 6.80 lakh |
| Thar | Rs. 6.27 lakh – Rs. 8.99 lakh | Rs. 6.15 lakh – Rs. 8.84 lakh |
| Scorpio | Rs. 9.40 lakh – Rs. 14.60 lakh | Rs. 8.90 lakh – Rs. 14.10 lakh |
It is understood that the ex-showroom prices of all cars in India except hybrid drivetrains are expected to decrease. The drop in prices will range between 2.25% and 12%.
Luxury cars and SUVs are benefitted the most, as these will witness a larger price drop than the rest of the vehicles. It should be noted that the price of insurance has also increased post Goods and Services Tax implementation. Motor insurance premiums have gone up from 15% to 18%. Since luxury cars attract higher insurance premiums, the variance in the on-road price of these vehicles may be minimal.
One year after GST implementation, the price of cars have seen a slight increase. The cost of the most popular car models are as indicated below:
| Current Maruti car prices 2018 | ||
|---|---|---|
| Model | Price in 2018 (ex-showroom Delhi) | |
| Alto 800 | Rs.2.53 lakh - Rs.3.83 lakh | |
| Vitara Brezza | Rs.7.58 lakh - Rs.10.55 lakh | |
| Dzire | Rs.5.60 lakh - Rs.9.45 lakh | |
| Swift | Rs.4.99 lakh - Rs.8.76 lakh | |
| WagonR | Rs.4.19 lakh - Rs.5.36 lakh | |
| Celerio | Rs.4.21 lakh - Rs.5.40 lakh | |
| The popular Hyundai cars 2018 | ||
|---|---|---|
| Model | Price in 2018 (ex-showroom Delhi) | |
| Eon | Rs.3.33 lakh - Rs.4.70 lakh | |
| Grand I10 | Rs.4.74 lakh - Rs.7.51 lakh | |
| Xcent | Rs.5.61 lakh - Rs.7.68 lakh | |
| Verna | Rs.7.90 lakh - Rs.12.86 lakh | |
| 2018 Creta | Rs.9.44 lakh - Rs.15.04 lakh | |
| All New Elantra | Rs.13.69 lakh - Rs.19.92 lakh | |
| Most popular Tata cars in 2018 | ||
|---|---|---|
| Model | Price in 2018 (ex-showroom Delhi) | |
| Eon | Rs.3.33 lakh - Rs.4.70 lakh | |
| Grand I10 | Rs.4.74 lakh - Rs.7.51 lakh | |
| Xcent | Rs.5.61 lakh - Rs.7.68 lakh | |
| Verna | Rs.7.90 lakh - Rs.12.86 lakh | |
| 2018 Creta | Rs.9.44 lakh - Rs.15.04 lakh | |
| All New Elantra | Rs.13.69 lakh - Rs.19.92 lakh | |
| Mahindra most popular models in India 2018 | ||
|---|---|---|
| Model | Price in 2018 (average ex-showroom) | |
| Marazzo | Rs.9.99 lakh onwards | |
| Scorpio | Rs.10.08 lakh onwards | |
| Bolero | Rs.7.43 lakh onwards | |
| XUV500 | Rs.12.58 lakh onwards | |
| KUV100 NXT | Rs.4.76 lakh onwards | |
| TUV300 | Rs.8.34 lakh onwards | |
| Xylo | Rs.9.33 lakh onwards | |
| E2o PLUS | Rs.7.75 lakh onwards | |
GST has impacted each section of the automobile market differently.
This segment of cars is one of the most popular in the country. Some models in this segment include the top-selling:
It is understood that this segment of vehicles will be positively impacted by the new GST rates. The previous tax rate on sub 4-metre hatchbacks, SUVs, and sedans was 31.5%. This was inclusive of the excise duties, cesses, and value added tax (VAT). The new tax rate on these models is 29%, including the 28% GST slab and an additional 1% cess that is applicable to cars in this segment.
Effectively, cars in this category will see a drop in price by 2.5% after 1 July 2017. It should be noted that this rate is applicable before insurance and registration charges. This is the least tax slab for SUVs and cars that have an internal combustion engine.
The sub 4-metre diesel car category with engine capacity less than 1.5 litres is another highly popular segment in the country. Some of the models in this segment include:
As per the previous tax structure, the sedans, SUVs, and hatchbacks in this category were taxed at 33.25%. This included the excise duties, VAT, and cesses. After the new GST regime, these cars are charged a tax of 31% (that includes 28% GST and 3% cess). In a nutshell, cars in this category will be cheaper by 2.25%, excluding registration and insurance charges.
A small section of cars in the Indian automobile market fall in this category. These include the likes of:
The previous tax structure for hatchbacks, subcompact sedans, and subcompact SUVs in the category was 44.7%. This was inclusive of VAT, added cess, and excise duties. The post GST structure has altered that figure to 43%. This is inclusive of 28% GST and 15% cess. So, cars in this category will cost slightly lesser than before, i.e., by 1.7% excluding registration and insurance charges.
Since this is a small segment in the Indian market, the reduction in cost may not make a significant impact on an overall scale.
Cars longer than 4 metres with petrol engines larger than 1.2 litres and diesel engine capacity more than 1.5 litres form a major chunk of vehicles that are sold in the country. Some of the cars in this category are:
As per the older tax rates, these vehicles were levied 51.6% tax. This included excise duties, VAT, and added cess. The new tax rate for these vehicles is 43%. This includes 28% GST and an additional 15% cess.
This implies that cars in this segment will be cheaper by 8.6%, a significant value. This price drop is expected to make this category a lot more popular with the consumers. The Indian audience has been showing a trend of moving towards premium hatchbacks and bigger sedans before the GST implementation as well.
This segment includes all SUVs that are longer than 4 metres, such as:
This category of cars has been seeing increased popularity in the recent past, as people are moving towards the purchase of these models.
The earlier tax rate for this segment was 55%, including VAT, excise duties, and cess. As per the new tax structure, the total tax on these cars is 43%, including 28% GST and 15% additional cess. Effectively, cars of this category are now cheaper by 12%, the biggest drop in tax rate in the 4-wheeler (with internal combustion engine) segment.
Although hybrids are a small section of the Indian automobile industry, these vehicles are very popular around the world. In India, the most prominent hybrid cars sold are:
The earlier tax rate for this section was 30.3%, including various added cesses, VAT, and excise duties. As per the new GST structure, the tax rate for these vehicles has seen a significant increase, with the final value standing at 43%. This includes 28% GST and an additional 15% cess. This emphasizes the government’s move to dissuade manufacturers from introducing current and modern hybrid technology into the market.
The only dealer of mainstream electric cars in the country is Mahindra Electric. The models Mahindra e20 with 5 doors and Mahindra eVerito are the most popular fully electric vehicles in India.
The pre-GST tax structure for these vehicles was 20.5%. This includes VAT, excise duties, and added cess. The new tax rate for this segment is 12% GST, without any cess. This indicates a drop in tax by 8.5%.
The government is clearly trying to push the propagation of all-electric motoring in the country. This is also in alignment with the government’s strategy to make Indian roads have all-electric cars and SUVs by 2030. But the readiness of the country in adopting the new technology is something that is highly debated.
GST of 18% is applicable on all banking products and services from the 1st of July, 2017.
The additional 15% cess that was going to be imposed on specific categories of second hand vehicles shall not be chargeable. Certain categories of larger vehicles which come in larger dimensions and a larger engine capacity will attract a GST of 28% plus 15% cess. This comes up to a total of 43%. As per a notification issued by the government, a flat rate of 28% will be levied on the dealer’s margin when a pre-owned car is sold. The tax structure will come inbuilt into the price of the vehicle which the customer has to pay. Industry experts say that it is not a simple decision to make as tax rates could vary from one state to another.
24 July 2017
The recently launched Xcent facelift and Grand i10 have recently been benefited from the new GST rates. The Tuscon, a mid-sized SUV, has become cheaper by over 1.12 lakh while the ex-showroom price of the Hyundai Grand i10 has been reduced by over Rs.6,000. The revision in prices of these vehicles have already been updated on their main website. Hyundai's line-up of vehicles have observed marginal differences in their prices across all states in the country. Other major automobile manufacturers like the Nissan, Skoda, Maruti Suzuki, Tata Motors, JLR, BMW, and Honda have all passed on the benefits of GST to their customers to improve customer relations and maintain their customer base.
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