Impact of GST On Car Prices In India

Goods & Service Tax (GST) has now replaced all multiple state and centre taxes like excise, NCCD, infra cess, CST, VAT, etc. The implementation of GST has brought some good news for new car buyers. In almost all parts of the country, all cars barring hybrid vehicles have become more affordable than before.

It should also be noted that there will be some increase in insurance costs and loan EMIs as service tax has been increased from 15 per cent to 18 per cent. Also, cars belonging to the small and mid-size segment were expected to get slightly costlier than before. However, prices of most Maruti Suzuki cars belonging to these segments have either come down or remained as is.

Worth noting is the fact that hybrids are now classified as luxury cars only and attract 43 per cent GST. The increase in taxes will hurt hybrid vehicles the most in cities like Delhi where these vehicles previously enjoyed lower VAT rate (5 per cent) and excise duties (12.5 per cent).

Post GST Tax Rates
		Base	Cess	Net
Small cars	Petrol	28.00%	1.00%	29.00%
	Diesel	28.00%	3.00%	31.00%
Mid-size cars		28.00%	15.00%	43.00%
Luxury cars		28.00%	15.00%	43.00%
SUVs		28.00%	15.00%	43.00%
Hybrids		28.00%	15.00%	43.00%
Electric		12%	0.00%	12%

Cars are considered as luxury goods under GST hence they fall in the 28 per cent tax slab. Over and above, based on vehicle classification there is an extra cess of 1, 3 or 15 per cent.

Let’s consider a few cars to see the impact of GST on ex-showroom prices in Delhi and Mumbai.

1. Small Car (petrol)

Maruti Suzuki Alto 800	Pre-GST ex-Delhi	Post GST ex-Delhi (in Rs)	% change
STD	Rs 2.50 lakh	Rs 2.49 lakh	-0.4%

Maruti Suzuki Alto 800	Pre-GST ex-Mumbai	Post GST ex-Mumbai	% change
STD	Rs 2.74 lakh	Rs 2.61 lakh	-4.74%

2. Small Car (diesel)

Maruti Suzuki Dzire	Pre-GST ex-Delhi	Post GST ex-Delhi (in Rs)	% change
ZDi+ AGS	Rs 9.41 lakh	Rs 9.39 lakh	-0.21%

Maruti Suzuki Dzire	Pre-GST ex-Mumbai	Post GST ex-Mumbai	% change
ZDi+ AGS	Rs 9.85 lakh	Rs 9.32 lakh	-5.38%

3. Mid-size Car

Maruti Suzuki Ciaz	Pre-GST ex-Delhi	Post GST ex-Delhi (in Rs)	% change
Sigma	Rs 7.72 lakh	Rs 7.65 lakh	-0.91%

Maruti Suzuki Ciaz	Pre-GST ex-Mumbai	Post GST ex-Mumbai	% change
Sigma	Rs 8.31 lakh	Rs 7.83 lakh	-5.78%

4. Luxury Car

Toyota Corolla Altis	Pre-GST ex-Delhi	Post GST ex-Delhi (in Rs)	% change
1.8 VL CVT	Rs 19.91 lakh	Rs 18.67 lakh	-6.23%

Toyota Corolla Altis	Pre-GST ex-Mumbai	Post GST ex-Mumbai	% change
1.8 VL CVT	Rs 20.99 lakh	Rs 18.92 lakh	-9.86%

5. SUV

Toyota Fortuner	Pre-GST ex-Delhi	Post GST ex-Delhi (in Rs)	% change
2.8 4WD AT	Rs 31.86 lakh	Rs 29.18 lakh	-8.41%

Toyota Fortuner	Pre-GST ex-Mumbai	Post GST ex-Mumbai	% change
2.8 4WD AT	Rs 32.85 lakh	Rs 29.59 lakh	-9.92%

6. Hybrid Car 

Toyota Camry	Pre-GST ex-Delhi	Post GST ex-Delhi (in Rs)	% change
2.5 Hybrid	Rs 31.98 lakh	Rs 37.23 lakh	16.42%

Toyota Camry	Pre-GST ex-Mumbai	Post GST ex-Mumbai	% change
2.5 Hybrid	Rs 36.35 lakh	Rs 37.94 lakh	4.37%

For reference, cars in India are classified on the following criteria:

1. Small cars – Cars under four-metre length powered by a petrol engine not greater than 1.2-litre or a diesel engine not greater than 1.5-litre by displacement

2. Mid-size cars – Cars over four-metre length powered by either a petrol or a diesel engine not greater than 1.5-litre displacement

3. Luxury cars – Cars over four-metre length powered by either a petrol or a diesel engine that is greater than 1.5-litre displacement

4. SUVs – Cars over four-metre length and 170mm ground clearance powered by either a petrol or a diesel engine that is greater than 1.5-litre displacement

Maruti Suzuki Drops Car Prices By 3 Per Cent - Read in detail 

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Toyota Camry Hybrid Hit Hard By GST, Fortuner Prices Drop - Read in detail