Taxes Breakup in Buying a Car including GST+ Road Tax + Taxes as Part of Car Ownership. Breakup Composition in Hatch, Sedan, Luxury Cars as Ownership Costs
Taxes in Buying New Car
Car Ownership is a matter of Joy and Pride for the Car Owner. But - other than it - is also a matter of Joy for Government - as they make Huge Revenue not only at time of Purchase but at Ownership too
Earlier in Pre GST Scenario had multiple taxes
- Excise Duty
- VAT
- Infrastructure Cess
- CENVAT
- Entry Tax / Octroi / LBT
which are are all merged as part of GST - but as a Car Owner its Important to assess in how much Taxes do we pay
GST on Buying Car
| GST | Classification |
| 28% + 1% Cess | Sub 4 Meter Petrol Cars under 1.2 Litre engine |
| 28% + 3% Cess | Sub 4 Meter Diesel Cars with Engine < 1.5 Litre |
| 28% + 17% Cess | > 4 Meter Cars with Engine < 2 Litre |
| 28% + 20% Cess | Sedan and SUV Cars above 4 Meter Cars with Engine > 2 Litre and Laden GC< 170 mm |
| 28% + 22% Cess | SUV Cars above 4 Meter Cars with Laden Ground Clearance > 170 mm |
See how GST and Cess Calculated on Jeep Compass
This is a quote from Authorized Jeep Showroom. As can be seen in above quote
- 28% GST is charged equivalent to Rs 3.8 Lakh
- 17% Cess is Charged equivalent to Rs 2.3 Lakh
GST and Cess is Calculated on Base Price of Vehicle (Factory Price + Transit Insurance + Freight + Dealer Margin)
On Face of it, looks like exorbitant tax pf Rs 6.1 Lakh as GST Paid on a Car having Ex-showroom of Rs 19.69 Lakh
Road Tax
Then is Road Tax which is applied on buying Car and goes to State TRansport Department. Road Tax Varies from State to STate.
You can calculate RTO Charges and Road Tax - 
For a Car Like Compass Petrol its Rs 1.96 Lakh as Road Tax which is applied in Delhi. The same may be higher or slight lower in Other States
| Road Tax | 3% to 24% | Based on Vehicle Pricing - Differential in every State |
Positive Side of Taxes Paid on Buying Car
Its Important for a Vehicle Owner also to understand that Taxes are One Time only. Been
- GST is applied on Paying Car as a One Time Payment at time of Buying Car
- Differential Tax is applied. For Budget Cars are Lower Cess as against Higher Cess for Bigger Cars
- Road Tax is Valid for 15 Years (in almost all states except West Bengal having option of 5 Year and 15 Year)
Government uses these Taxes to
- Provide in Infrastructure Support
- Development of Roads, Connecting Highways
- Build Efficient Transport System and share it for benefit of Common Man
- Build India as a Nation to Provide Best in Class Connecting Roads to users
So, even if you pay in say Rs 8 Lakh as all inclusive Tax (Road Tax + GST + Cess) on Jeep Compass as Premium SUV which is what like Valid for 15 Years. it would only imply paying tax of Rs 66000 Annually on a Car and use in all Infrastructure, Roads, Transport System as build by Government
For a Small Car like Maruti Swift Vxi - this all inclusive Tax (Road Tax + GST + Cess) is Rs 2 Lakh which is what valid for 15 years. it would only imply paying tax of Rs 16000 Annually on a Car and use in all Infrastructure, Roads, Transport System as build by Government
So in a way you can be Proud of yourself to be Contributing to Infrastructure Development and Nation Building by buying a Car !!
Taxes as Part of Ownership (Post Purchase)
Component |
Rate |
| Taxes on Petrol (Excise + VAT) | Almost Running to tune of Rs 50 per Litre on Petrol, Diesel |
| GST on Insurance Premium | 18% |
| GST on Labor Charges | 18% |
| GST on Spare Parts - Tyre, Battery, Spare Parts | 28% |
| GST on Loan Foreclosure | 18% |
