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New tax regime to make luxury cars cheaper, small cars expensive
The much-awaited Goods and Services Tax (GST), which will come into play from July 1, will make common man items such as plastic furniture and small cars costlier, but it will bring cheers to those who want to buy luxury cars.
Mumbai: The much-awaited Goods and Services Tax (GST), which will come into play from July 1, will make common man items such as plastic furniture and small cars costlier, but it will bring cheers to those who want to buy luxury cars.
Tax on small cars under GST will go up to 31 per cent as compared to 26-28 per cent now.According to auto industry estimates, price of luxury cars, all known as rich man toys, will come down by 3 per cent to 10 per cent post-GST implementation.
“GST, India’s biggest tax reform, will be extremely positive step for the economy and also for the luxury car sector as prices will come down, benefitting our customers,” Vikram Pawah, president, BMW India, told The Hans India, here.
He expects the GST to kick-start the economy and put it in a higher orbit of growth, thereby rising aspirations of people. “As people’s aspirations go up, they will look for more premium experiences. As consequence, companies like BMW will benefit because sales will go up,” BMW India president observed.
He also said that GST would make operations of companies easier. “At present, taxes vary from state to state. But, post-GST, there will be single tax across the country. That will be make operations of all companies easier,” Pawah said.
However, GST will bring bad tidings to small cars as their prices will go up by at least 3 per cent under the new indirect tax regime.
“Under GST, prices of small cars will go up by 3 per cent. We will have to pass on the burden to customers as we are not in a position to absorb the hike due to shrinking margins,” a senior official of a Maruti Suzuki dealership in Hyderabad said.
Under GST, all cars attract basic tax of 28 per cent as they are slotted in the top tax bracket. Besides, there is an additional cess ranging from three to 15 per cent with luxury cars and SUVs being levied with the highest cess.
As consequence, luxury cars and large sport utility vehicles will be taxed at a maximum of 43 per cent against a minimum of 46 per cent in the current tax structure. In the case of small cars, the GST will be up to 31 per cent compared with 26-28 per now.
