NEW DELHI – The “Next Gen GST” changes that Finance Minister Nirmala Sitharaman announced are now official as of September 22. The new tax system is a big change for the automotive industry. It makes entry-level cars cheaper and raises the tax on luxury items.
The new changes mean that cars and motorcycles with engines up to 350cc will now be taxed at 18%, which is a big drop from the previous 28%. This change is meant to make it easier for people to buy tiny vehicles and entry-level two-wheelers.
On the other hand, two-wheelers with engines greater than 350cc and automobiles that are too big to be categorized as “small cars” will henceforth be considered luxury goods and taxed at a flat 40%. The old system charged a 28% tax and a cess of up to 22%, for a total tax of almost 50%. This is a shift from that. Electric vehicles will stay in the 5% tax level, which is a big deal since it shows that the government is still working toward sustainable transportation.
New Car Tax Breakdown
Little Cars: According to the new rules, cars with gasoline engines up to 1200cc or diesel engines up to 1500cc and a length of no more than 4000mm will now be taxed at 18%. This would make well-known cars like the Hyundai i10 and Maruti Suzuki Alto much cheaper.
Bigger Cars: All cars that don’t match the “small car” requirements will be taxed at the new 40% rate. This makes the old tax system, which had a 28% tax and a variable cess, easier to understand.
Car companies say they will lower prices
After the government made the news, several big car companies have already said they will lower prices to pass on the GST savings to their customers:
Tata Motors was the first company to say they were lowering prices, and they have done so by up to ₹1,55,000. The Tiago is now up to ₹75,000 less expensive, and the Tigor is up to ₹80,000 less expensive. Prices have also gone down on other models, such as the Altroz, Punch, Nexon, Curvv, Harrier, and Safari.
Mahindra: The company that makes SUVs has also cut pricing on its most popular cars. The Mahindra Bolero, Bolero Neo, XUV 3XO, and Thar 2WD (Diesel) will now be taxed at 18%, while the remainder of the company’s cars will be taxed at 40%.
The Alto K10, which is Maruti Suzuki’s most popular car, is now ₹1,07,600 cheaper, bringing the price down to ₹3,69,900. The Grand Vitara has also had its price slashed in a similar way.
Renault has said that the prices of its cars will go down by as much as ₹96,395. For example, the Kiger’s price will go down from ₹11,29,995 to ₹10,33,600.
Jeep: Jeep India has also changed the cost of its SUVs, with some going down by as much as ₹4.84 lakh. For example, the price of the Jeep Compass has dropped from ₹18.99 lakh to ₹17.73 lakh.