•  Loading your search... Loading your search...
  • How GST has Affected Car Prices in India? is Rated as "Great!" by 34286 Users

    Fees & Charges

    Promised Interest Rate

    Customer Service

    Responsiveness

    Car Loan BYTES FROM OUR KITCHEN

    How GST has Affected Car Prices in India?

    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.

    GST Impact on Car Loan

    Listed below are the prominent changes in price of vehicles post GST:

    • Cars of length below 4 metres with petrol engines under 1.2 litres - price drop of around 2.5%
    • Cars of length below 4 metres with diesel engines under 1.5 litres - price drop of around 2.25%
    • Cars of length below 4 metres with petrol engines above 1.2 litres and diesel engines above 1.5 litres - price drop of around 1.7%
    • Cars of length above 4 metres with petrol engines above 1.2 litres and diesel engines above 1.5 litres - price drop of around 8.6%
    • SUVs - price drop of around 12%
    • Hybrids - price hike of around 12.7%
    • Electric vehicles - price drop of around 8.5%

    What is GST?

    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.

    Apply for Car Loan Online

    GST impact on Car Finance

    GST has impacted each section of the automobile market differently.

    1. Sub 4-metre vehicles with petrol engines less than 1.2 litre
    2. 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.

    3. Sub 4-metre vehicles with diesel engines less than 1.5 litre
    4. 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:

      • Vitara Brezza and Dzire diesel from Maruti Suzuki
      • Hyundai i20 diesel
      • KUV 100 and TUV 300 from Mahindra
      • Tata Tigor diesel
      • Ford EcoSport diesel
      • Hyundai Xcent diesel

      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.

    5. Sub 4-metre vehicles with diesel engines more than 1.5 litre, petrol engines more than 1.2 litre
    6. A small section of cars in the Indian automobile market fall in this category. These include the likes of:

      • Hyundai i20, 1.4 litre automatic
      • Ford EcoSport petrol with 1.5 litre engine

      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.

    7. Cars larger than 4 metres, all petrol and diesel engines (not including SUVs)
    8. 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:

      • Maruti Suzuki Ciaz
      • Mini 5-door
      • Honda City
      • Mercedes-Benz S-Class or E-Class

      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.

    9. SUVs larger than 4 metres, all petrol and diesel engines
    10. This segment includes all SUVs that are longer than 4 metres, such as:

      • Audi Q7
      • Mercedes-Benz GLC
      • Ford Endeavour
      • Toyota Fortuner
      • Volkswagen Tiguan
      • Mahindra XUV 500 and Scorpio
      • Tata Hexa

      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.

    11. Hybrids
    12. 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:

      • Toyota Prius and Camry Hybrid
      • Honda Accord Hybrid
      • Volvo XC90 T8 plug-in hybrid
      • Lexus RX450h SUV
      • ES300h sedan

      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.

    13. Electric cars
    14. 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.

    To summarise, the change in tax rates across segments is as shown in the table below:

    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   55% 43% 12%
    Hybrids   30.3% 43% - 12.7%
    Electric Vehicles (EVs)   20.5% 12% 8.5%

    Reduced price of cars after GST announcement

    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:

    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 car prices

    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:

    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:

    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:

    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

    Summary

    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.

    Car Loan Reviews

    • Axis Bank Car Loan
      "Best Service"
      0.5 5.0/5 "Blown Away!"
      My car loan experience was good with Axis bank, the loan amount was based on my requirement and the rate of interest was nominal when compared to other banks. Customer service was good and they responded on time. The tenure period for this car loan is 5 years.
      Was this review helpful? 0
      , lucknow
      Reviewed on May 23, 2018
    • ICICI Bank Car Loan
      "Good service"
      0.5 4.0/5 "Great!"
      I have taken a car loan with ICICI bank and my experience was good, the loan amount was based on my requirement and the rate of interest was nominal when compared to other banks. Customer service was good, they responded on time and the tenure period for this loan is 5 years.
      Was this review helpful? 0
      , hyderabad
      Reviewed on May 23, 2018
    • SBI Car Loan
      "Excellent service"
      0.5 5.0/5 "Blown Away!"
      Got the car loan from the State bank around 6 years ago. They have disbursed the loan amount within the time frame. The customer support service and the response is good from the State bank of India,. They required loan amount has been given . The rate of interest and the charges are average here.
      Was this review helpful? 0
      , new delhi
      Reviewed on May 22, 2018
    • HDFC Bank Car Loan
      "Good"
      0.5 5.0/5 "Blown Away!"
      I have a credit card from Hdfc bank, I have been using the credit card since 12 years, it's my first credit card, and I am quite happy about it as I am still holding on to this credit card. The services are good I never faced any problems with this credit card and it has been running smoothly. I am quite satisfied with this card.
      Was this review helpful? 0
      , kolkata
      Reviewed on May 21, 2018
    • SBI Car Loan
      "Very good service with no charges! "
      0.5 5.0/5 "Blown Away!"
      I took a car loan from SBI, believe me I got the loan amount with in a day. It must be because of the job profile. I got the loan for 7 Lakhs cleared the loan with in 2 Months. There were no part payment charges , Pre-closure charges and No processing charges. SBI is the best for car loans and their interest rate is also competitive.
      Was this review helpful? 0
      , chennai
      Reviewed on May 21, 2018
    • review Car Loan
      "Average service"
      0.5 2.0/5 "Expected more"
      I have taken this loan for purchasing of my waganor car, it has almost been three years i have taken this loan. The rate of interest was around 15% which has been a little high. The documents where collected at the doorsteps which has been easy but after that the process has taken a little more time than i expected.
      Was this review helpful? 0
      , new delhi
      Reviewed on May 21, 2018
    • SBI Car Loan
      "Good Service"
      0.5 5.0/5 "Blown Away!"
      I took a car loan from the SBI, all the aplication and documentation was done at the branch. I got the loan credited to my account with in a span of seven day. The whole process was smooth and hassle free. I never had any issues with their services.
      Was this review helpful? 0
      , new delhi
      Reviewed on May 20, 2018
    • HDFC Bank Car Loan
      "Best Service"
      0.5 5.0/5 "Blown Away!"
      My car loan experience was good with HDFC bank, the loan amount was sufficient and the rate of interest was nominal when compared to all other banks. This was a used car loan with the tenure period of 3 years. Customer service was good with HDFC bank and their response was on time.
      Was this review helpful? 0
      , kolkata
      Reviewed on May 20, 2018
    • ICICI Bank Car Loan
      "Good Service"
      0.5 5.0/5 "Blown Away!"
      I took a Car loan of 7 lakhs from the ICICI bank. The loan application process is very fast with in 5 days the loan amount was credited to the account. Overall the whole process was quick and hassle free. I never had any issues with the process...
      Was this review helpful? 0
      , secunderabad
      Reviewed on May 20, 2018
    • Volkswagen Finance Car Loan
      "Average service"
      0.5 3.0/5 "Satisfactory"
      I have taken a car loan from Volks Wagen finance and my loan experience was not up to the mark. The loan amount was for Rs 5.6 lakhs with nominal interest rate when compared to all other sources. There are lot of charges on this loan and the tenure period for this loan is 5 years.
      Was this review helpful? 0
      , hyderabad
      Reviewed on May 20, 2018
    • ICICI Bank Car Loan
      "Very good service"
      0.5 5.0/5 "Blown Away!"
      I took a car loan from the ICICI bank for 18 Lakh. The loan is about get closed just need to pay a month more.I applied for the loan through the bank and it took almost 25 days to process the loan. The branch staff came to my home and the documentation part is hassle free. Overall it was a smooth loan experience.
      Was this review helpful? 0
      , mumbai
      Reviewed on May 20, 2018
    • Bank Bazaar Car Loan
      "Good response and fast approval"
      0.5 4.5/5 "Excellent!"
      I got good response through bankbazaar. The executives were very helpful. I applied for a car loan though bankbazaar. The procedure was very easy and simple. They have the comparison option which we can easily compare with all the financial sectors.
      Was this review helpful? 0
      , chennai
      Reviewed on May 18, 2018
    • TVS Credit Services Car Loan
      "TVS car loan"
      0.5 4.5/5 "Excellent!"
      I have taken a car loan from TVS CREDIT SERVICES and the approved loan amount was 1.90 lakhs. The rate of interest was 14%. The monthly emi is 16000 for tenure of 13 months .There was some processing fee from TVS credit services. Easy documentation done.
      Was this review helpful? 0
      , chennai
      Reviewed on May 18, 2018
    • HDFC Bank Car Loan
      "HDFC car loan"
      0.5 3.5/5 "Pretty good"
      I have taken a car loan from HDFC bank and the approved loan amount was 4.99 lakhs. The rate of interest was 8% flat. I have taken the tenure of 4 years.They have charges for paper work around 2500. And 19000 for GPS. They have forced me to take the GPS and a loan insurance of 3500.
      Was this review helpful? 0
      , hyderabad
      Reviewed on May 18, 2018
    • SBI Car Loan
      "Best Service"
      0.5 5.0/5 "Blown Away!"
      I have taken a car loan with SBI and my loan experience was good, the loan amount was for Rs 4 lakhs with nominal interest rate when compared to other banks. The process was quick and i received my loan amount on time. Customer service was good and the tenure for this loan is 5 years.
      Was this review helpful? 0
      , new delhi
      Reviewed on May 18, 2018
    • Bank Bazaar Car Loan
      "Good service"
      0.5 5.0/5 "Blown Away!"
      Previously i had an experience while i applied fro a credit card through bankbazaar and thus i came to know that they even provide loan facilities. Later i applied for card loan and the it got approved with the time limit. I am satisfied with bankbazaar service.
      Was this review helpful? 0
      , hyderabad
      Reviewed on May 18, 2018
    • Kotak Car Loan
      "Average service"
      0.5 3.0/5 "Satisfactory"
      Around 2 years ago, I have got the car loan from the KOTAK MAHINDRA BANK. The customer support service and the response is good from the Kotak and they have disbursed the loan amount within a week time. The rate of interest and the charges are average here.
      Was this review helpful? 0
      , chennai
      Reviewed on May 18, 2018
    • HDFC Bank Car Loan
      "HDFC car loan"
      0.5 4.0/5 "Great!"
      I have taken a car loan from HDFC bank and the approved loan amount was 5.40 lakhs. The rate of interest was 8.75%. First it was 8.25% and since the financial year got changed the interest got changed to 8.75%. The monthly emi is 11658 for tenure of 5 years .There was a processing fee of 4000.
      Was this review helpful? 0
      , kochi
      Reviewed on May 18, 2018
    • Bank Bazaar Car Loan
      "Fast approval for loan"
      0.5 3.0/5 "Satisfactory"
      I just used bankbazaar to calculate my EMI and later i got processed with my car loan through bankbazaar. The credit score checking option with bankbazaar was good.It was really helpful to use this website .The customer service and response with the bank is fine.
      Was this review helpful? 0
      , kochi
      Reviewed on May 18, 2018
    • TVS Credit Services Car Loan
      "TVS credit car loan"
      0.5 4.0/5 "Great!"
      I have taken a car loan from TVS CREDIT SERVICES and the approved loan amount was 2.26 lakhs. The rate of interest was nominal. The monthly emi is 6100 for tenure of 5 years.There was a processing fee was 3% of the approved. The customer service and response was good.
      Was this review helpful? 0
      , thiruvananthapuram
      Reviewed on May 17, 2018
    Common Loader Icon
  • reTH65gcmBgCJ7k
    This Page is BLOCKED as it is using Iframes.