The Centre's proposed reduction in GST is also expected to lead to a drop in costs for car buyers, reducing on-road prices as well as EMIs.
There are indications that GST for many models of cars will reduce from 28% to 18%, but cess varies based on factors like the length of the car, category and engine size. So, how much can you expect to save if the proposal is passed and the changes come into effect?
Data from brokerage firm Nomura on some popular models shows that the on-road price of a Maruti Suzuki Wagon R is expected to drop by approximately Rs 60,000, Maruti Suzuki Baleno by approximately Rs 75,000, Hyundai Creta by Rs 55,000 and the Mahindra XUV700 by Rs 1.15 lakh.
The chart below shows the current GST+cess and the new GST for select models.
The price difference for the models is shown in the chart below.
Nomura has also estimated that EMIs will go down by about Rs 600-Rs 2,000, depending on the model.
For the WagonR, the EMI will drop by Rs 1,047, and the figure will be Rs 1,935 for the XUV700.
On Thursday, a six-member group of ministers accepted the Centre's plan to reduce the number of tax slabs under GST from four to two main ones. Under the proposed plan, key goods will attract a GST of 5% and others will have an 18% rate.
'Sin goods', including alcohol, tobacco and fast food will, however, attract a special rate of 40%. The same rate is expected to apply to cars in some categories.
Finance Minister Nirmala Sitharaman told the Group of Ministers that "the rate rationalisation will provide greater relief to the common man, farmers, the middle class and MSMEs, while ensuring a simplified, transparent and growth-oriented tax regime".
