The Government of India is planning a significant relief for prospective car and two-wheeler buyers in the country. The GOI is looking forward to bring a new GST regime, creating distinctions in the tax rates. Looking at the current scenario, the small cars attract 28 per cent GST plus small cess rates of 1-3 per cent. Meanwhile, the SUVs attract up to 50 percent tax, including GST and cess rates.
SUV Definition To Be Dropped
The government is planning to propose reduced GST rates for cars and two-wheelers in India. Prime Minister Narendra Modi, in his Independence Day speech, hinted at the plans. Apart from cars, SUVs, and two-wheelers, the government is also planning to reduce the tax rates for air conditioners and construction materials.
As per sources, the current definition of SUVs for GST classification could be removed to avoid confusion.
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According to reports, the new GST regime will have two tax slabs, namely- Merit and Standard. The Merit category will feature goods and products with GST rates up to 5 percent. Meanwhile, the Standard GST category will attract 18 percent GST. While the exact details have not been announced yet, the government is planning to introduce the new GST regime by Diwali this year.
This move by the Central Government is expected to benefit all sectors of the Indian automotive industry. With the reduced GST rates, the manufacturing and components prices might also get a push, and lead to high manufacturing rates. The one category that might receive immediate benefit is the small cars under Rs 10 lakh and the entry-level motorcycles. However, the electric cars are likely to continue with 5 percent GST rates, also the GST rates on luxury cars might remain the same.