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Implementation of GST may lead to price increase for small cars
Posted on: 26/Apr/2017 6:56:43 PM
The prices of small and medium range cars will go up after the introduction of GST (Goods and Services Tax).
Based on the categories of various items, the GST structure has been divided into 4 slabs - 1, 12, 18, and 28 percent for GST.
Presently, for small cars, the tax is levied as central sales tax - 12.5 percent and State Value Added Tax - 14.5 to 15 percent. Accordingly, the tax for a small car is 27-27.5 percent.
It is understood that the small cars will come under the slab of 28 percent under the new GST system. So, the price of the small cars will go up to some extent.
For the medium range cars (1500cc engine), presently, Central Sales Tax - 24 percent and State VAT of 14.5 percent. Under the new GST scheme, these cars will be under the 28 percent slab.
In order to compensate the loss incurred by the state governments following the implementation GST, some items like tobacco products, and some luxury vehicles will be charged 15% additional tax for the next 5 years. When including this aspect, the tax for the medium cars is likely to be increased by 4.5 percent.
Presently, for the large cars and SUV cars, a sales tax of 27-30 percent and VAT 14.5 percent - a total of 41.5 - 44.5 percent taxes are charged. However, under GST, this is likely to reduce to 43 percent.
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