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GST Impact on Car Prices in Hatchback, Sedan, SUV Segment in July 2017

GST Impact on Car Prices in Hatchback, Sedan, SUV Segment in July 2017

GST Tax Impact on Car Prices in India. Know how GST going to impact Hatchback, Sedan and SUV Prices as been Economical or Expensive from 1st July 2017

 

GST Impact on Car Prices in India

Passenger Car Buying is one sector where there is regime of high taxes. For calculating Prices at Various levels 

> Excise Duty (ranging from 12% to 27%) - For calculating Ex-Factory Price
> Infrastructure Tax (1% to 4%) - For calculating Ex-Factory Price
> VAT Duty (12.5% to 14.5%) - For calculating Ex-showroom Price
> Octroi / Entry Tax (4% to 6%) - Applicable in Certain States
> Road Tax - For calculating On Road Price

GST - Goods and Service Tax to replace and merge Excise Duty, Infrastructure Cess, VAT Duty as One Entity called GST. While - Octroi would likely be abolished as GST is a destination based Tax. 

To be implemented from 1st July 2017 - GST will cover all tax component till the time the Passenger Car would arrive in state dealer Road Tax though would continue to be additional component on buying Cars and would not be covered under GST

 

Existing Scenario (Pre GST) Vs Post GST Scenario

Existing Scenario (Pre GST): Know Taxes Paid at Time of Buying Car

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

Based on Existing Slabs

 

GST Rates

GST Rates are fixed at 5%, 12%, 18% and 28%. Passenger Car Sector will attract the highest Slab of 28%.

Unlike Present Scenario where Excise, Infra Cess, Calamity Duty Imposed on Ex-Factory Price and VAT on Retail Price - GST will be imposed on Ex-Factory Price of the Car only.

The Taxes applicable post GST would be as below on Cars would be as below from 1st July 2017. There would be additional cess on Luxury Cars to make up for loss of Excise and VAT Ex-chequer amount to Government and overall cess on luxury cars would be 43%

Component Rate Classification
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

Now What Luxury Cars Means post GST

Government has not yet Clarified what Luxury Cars Means. Is it

» Size > 4 Meter and Engine > 1.5 Litre

» Engine > 1.5 Litre

Details yet expected on the Definition of Luxury Cars

 

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Final Impact of GST on Car Prices in India (2017 Onwards)

Below would be the likely Impact of GST on Car Prices in Delhi NCR India (If looking for Impact State wise - refer this article post on GST Impact on Various States in India) :-

» Small Cars (Sub 4 Meter Segment) - No Positive Impact on Car Prices with 28% GST Cess. Infact, Small Cars would likely be expensive by 1% to 2%

» Mid Sedan, Mid SUV Range (> 4 Meter, But Engine < 1.5 Litre) - For Mid Segment Petrol Cars like Honda City, Maruti Ciaz - the taxes will be around 40.5% - so can expect a 2% to 2.5% Price hike to extent of Rs 15000 on Ciaz to Rs 18000 to Rs 20000 on Honda City Petrol

However for Diesel Cars - Overall impact will be almost Neutral to Marginal price hike of .5% to 1% Post GST Scenario on the Factory Price

» Luxury High End Cars (Engine > 1.5 Litre but Ground Clearance < 170 mm) - This will carry in around 43% Duty, which will be around .5% to 1% for Luxury Petrol and for Luxury Diesel Cars - the impact will be gain of around 2% to 3%

» Luxury SUV Cars (Engine > 1.5 Litre and Ground Clearance > 170mm) - This will carry in around 43% Duty, which makes it the biggest beneficiary. Expect close to 5% to 6% Price Reduction in High End Luxury SUV Cars - making it biggest beneficiary post GST

» Hybrid Cars - This will carry in around 40% to 43% Duty, and there will not be any benefits to Ciaz, Ertiga, Scorpio, Camry as against Existing Scenario with a Steep Price Hike on Hybrid Cars expected post GST Scenario. Details on - GST Impact on Hybrid Cars

In all - There would not be any benefit post GST - to the Mass Market in Passenger car Sector (in terms of Hatchback, Mid sedan) - however the Luxury Vehicle Segment including High End SUV Range will cheer with steep Price Cut. It was earlier anticipated for 20% Cess - but with 28% GST on Cars and then Luxury Cess or State Compensation Cess- it will likely be detrimental for Automobile sector - which was eagerly awaiting for GST and Small Car buyers who deferred purchase call for 2017. Thus - net Impact of GST on Car Prices from 1st July 2017 would be:

> Hatchback Cars - Prices will likely increase by 1% to 2%

> Mid Sedan Petrol - Prices will likely increase by 2% to 2.5%

> Mid Sedan Diesel - Prices will increase by .5% to 1%

> Diesel Cars with Engine > 1.5 Litre but Ground Clearance less than 170mm - Prices will reduce marginally by .5% to 1%

> Luxury Petrol Cars with Ground Clearance under 170 mm - Price Cut of 2% to 3%

> High End Diesel SUV Cars - Price Cut of 5% to 6%

> Hybrid Cars - Almost Rs 50K to Rs 1 Lakh (Ertiga, Ciaz, Scorpio) and almost Rs 2.5 Lakh (Toyota Camry) to be expensive (Delhi Region)

 

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Comments 10

Guest - PRABHAT PAL on Tuesday, 27 June 2017 11:57

Will Price of Hyundai Creta 1.6 increase or decrease after GST in Kanpur.

Will Price of Hyundai Creta 1.6 increase or decrease after GST in Kanpur.
Guest - Vijay on Saturday, 24 June 2017 10:29

Hi after gst mahindra tuv 300 plus car is increase r decrease .thx.

Hi after gst mahindra tuv 300 plus car is increase r decrease .thx.
Guest - Divakar on Saturday, 24 June 2017 07:27

Will Price of maruti wagon r increase or decrease after GST in Bihar??

Will Price of maruti wagon r increase or decrease after GST in Bihar??
Guest - Manish Maliwal on Friday, 23 June 2017 18:56

While calculating current tax please add impact of VAT on Excise & Infrastructure Cess also as at present VAT is calculated on price + ED + Cess

While calculating current tax please add impact of VAT on Excise & Infrastructure Cess also as at present VAT is calculated on price + ED + Cess
Guest - Jagan on Thursday, 22 June 2017 00:24

What is the GST impact in Bengaluru for Small Cars like Maruti Suzuki Dezire New ?
Does Bangalore levy octroi ?

Currently, its Ex-showroom price is 6,97,000

Will it remain same post GST or increase ?

What is the GST impact in Bengaluru for Small Cars like Maruti Suzuki Dezire New ? Does Bangalore levy octroi ? Currently, its Ex-showroom price is 6,97,000 Will it remain same post GST or increase ?
Guest - Samit Das on Monday, 19 June 2017 18:32

Pl tell me the cost of ford 3.2 endeavour AWD AT TITANIUM after 1 july 2017 ie after GST in chandigarh. Currently the base price or exshowroom price is Rs 3,17,5627

Pl tell me the cost of ford 3.2 endeavour AWD AT TITANIUM after 1 july 2017 ie after GST in chandigarh. Currently the base price or exshowroom price is Rs 3,17,5627
Guest - Yogesh Parkale on Sunday, 18 June 2017 23:08


Will Price of Hyundai Creta 1.6 increase or decrease after GST in Maharashtra

Will Price of Hyundai Creta 1.6 increase or decrease after GST in Maharashtra
Guest - Sachin on Sunday, 18 June 2017 00:36

Can you tell me impact in Mumbai for ged in Mumbai the pre and post GST difference should be 30% existing - 29% after GST, which still leads to saving after GST

Can you tell me impact in Mumbai for ged in Mumbai the pre and post GST difference should be 30% existing - 29% after GST, which still leads to saving after GST
Admin on Sunday, 18 June 2017 10:06

Hello,

Refer details on - GST Impact in Mumbai

Hello, Refer details on - [url=http://www.mycarhelpline.com/index.php?option=com_easyblog&view=entry&id=475&Itemid=91][color=red]GST Impact in Mumbai[/color][/url]
Guest - Manikandan on Sunday, 04 June 2017 10:14

Your blog on GST is very precise and informative

Your blog on GST is very precise and informative
Guest
Friday, 21 July 2017