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In an effort to simplify the tax structure and promote consumer demand, the Government of India plans to reduce GST rates on passenger vehicles up to less than 18% slabs, which will eventually help in the economy by increasing consumption. With the move, small cars, traditionally the Indian passenger vehicle market, is expected to see a route for revival of the Indian passenger vehicle market, but recently seen a dull development and a shrinking market.
What is GST 2.0?
During his speech on 15 August, Prime Minister Narendra Modi announced that the government is working on a reorganization GST regime, which is now being dubbed as GST 2.0. Under this regime, the government plans to simplify the tax structure with a low slab. Current GST regime has several slabs including 5%, 12%, 18%and 28%; Under the proposed tax structure, most of the items will be transported to only two main slabs – 5% for essential commodities and services, while most other items will be taken up to 18%. There will also be a special 40% rate, proposed for luxury goods.
How will GST 2.0 benefit the auto industry?
Under GST 2.0, most small and medium -sized cars are expected to be transferred to 18% slabs, meaning that consumers will have to pay less GST when purchasing these cars. However, luxury cars will be taxed at a rate of 40%. But, even, even luxury cars will see the rate of tax less than the current regime.
1,200 cc engine capacity and short petrol cars with length less than 4 meters currently attract 28% GST and 1% compensation cess. Small diesel cars with engine capacity above 1,500 cc and a length of less than 4 meters are 28% GST and 3% cess, resulting in a total tax of 31%. The GST rate for all cars except electric vehicles is 28%, but the cess rate changes and the total tax distinguishes in events. SUVs with engine capacity above 1,500 cc and size of more than 4 meters in length are made at a rate of 50%, including 28% GST and 22% cess.
In short, the current GST regime for passenger vehicles is slightly complicated. With the GST rate modification, the government is aiming to simplify it, which is expected to reduce the total advance cost of all passenger vehicles in India, which is currently less than that. The most profitable sections will be small cars, which are traditionally the spine of the industry. Automkers believe that it will bring back many potentially car buyers to the market, which are away from purchasing cars due to the issue of strength. The industry struggling with dull sales is expecting a major increase in sales with GST 2.0.
Top 10 most popular cars can be inexpensive with GST 2.0
While all passenger vehicles are expected to benefit from GST 2.0, there is a quick look on India’s most popular 10 cars which will be cheaper with the rate.
Maruti Suzuki Alto K10, One of the cheapest cars in India and one of the remaining 1.0-liter petrol engines inspire hatchback. It is highly popular in both private and taxi segments due to the low cost of propriety and practical quit. Alto K10 is expected to see the cost reduction with the expected GST. It is expected to look from a price drop 4.23 lakh (pre-showroom) almost 3.89 lakhs (East-Shoreroom).
Hyundai grand i10 nios, The Hyundai Grand i10 comes as an entry-level hatchback for the South Korean vehicle manufacturer, but promises an upmarket vibe. With GST 2.0, it may be cheaper than a 1.2-liter engine-powered small hatchback Around 5.98 Lakh (East-Shorroom) 5.51 Lakh (East-Shoreroom).
Maruti Suzuki S-Paso, Maruti Suzuki S -reso has recorded immense popularity among Indian car buyers within a short time after the launch in the country. The short hatchback with a long SUV stance is powered by a 1.0-liter pepping engine. Small and compact size, tried and tested engines in both private and taxi sectors, make it a popular, inexpensive and practical car for many consumers of the country.
Tata tiago, Tata Tiago is considered to be the safest entry-level hatchback in the Indian passenger vehicle market. The 1.2-liter engine propelized hatchback comes with a strong construction quality, a host of global NCAP 4-star security rating and upmarket features. It is available in both petrol-only and petrol-CNG powertrain. With GST shortage, Tiago is expected to be available at a low starting price 5.15 lakhs than (East-Shoreroom) 5.15 Lakh (East-Shoreroom).
Renault Kwid, Maruti Suzuki Alto’s direct contestant, Renault Kwid is the only hatchback from the French vehicle manufacturer in India. It played an important role in giving Renault a strong footprint in the Indian passenger vehicle market. With revived GST rates, the estimated decrease of Kwid may see 40,000 in its sticker value.
Tata nexon, One of the Bestseling Sub-Compact SUVs in India, Tata Nexon is also considered a benchmark of security in its segment. The SUV that is available with a wide range of powertrain options is expected to see a large price decrease due to GST 2.0. However, it should be seen which tax bracket SUV has posted the rate modification.
Hyundai buyer, Since its launch in the last decade, the Hyundai buyer remains the major revenue of the automaker in the Indian market. Stylish design, advanced technology-added upmarket features, wide range of powertrain options, and impressive performances play an important role behind its popularity. With a decrease in GST rate, Creta is expected to see significant benefits.
Mahindra Thar, Mahindra Tur is often dubbed as a jeep wing of the poor man. The lifestyle SUV, which is considered one of the true-blue off-roaders in India, is expected to see a significant amount of price decrease due to GST rate modification. However, the cost reduction spectrum for SUVs has yet been approved as the government is yet to be revised to reveal the structure.
Mahindra Scorpio n, Mahindra is a modern tech on the Scorpio N. Scorpio badge, which comes with an upmarket design and feature list, but the signature retains Scorpio Vaib. Currently a limit is priced 13.99 lakhs and 25.62 lakhs (East-Dhoreroom), Scorpio is expected to be seen about N The price of 3 lakhs is cut after the GST 2.0 regime is implemented.
Toyota Innova Crysta, Toyota Innova Crysta is the major revenue churning for the Japanese auto giant in India. This large MPV is also popular in private buyers as well as in the fleet segment. Relaxation, premium, and powerful powertrain options Toyota Innova Crysta make the Indian market a highly popular car. With GST rate modification, this MPV is expected to see a significant price reduction.
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