The new GST reforms meant that small cars would see a 10 per cent cut in their Goods and Services Tax. Let us see how this translates to consumers.
Earlier, most small cars attracted a 28 per cent GST plus an additional 1 per cent cess. In effect, the total GST-based expenses were 29 per cent of the car’s value. And now, it has reduced to 18 per cent.
The total savings under the new GST would be a discount of 8.5 to 9 per cent on the retail price of the vehicles in the small car segment, according to Maruti Suzuki India Chairman R.C. Bhargava.
Let’s take the example of the Maruti Suzuki Swift. Currently, it retails at Rs 6.49 lakh to 9.65 lakh under the 28 per cent GST + 1 per cent cess.
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Under the new 18 per cent GST, this would be 5.78 lakh to Rs 8.59 lakh—that is close to a Rs 1 lakh drop across variants!
“In terms of quantum, this [reduction] would account for Rs 45,000-Rs 50,000 at a minimum level. So the cheapest car could see a drop in price of about Rs 45,000,” added Bhargava.
“The growth of the small car segment will accelerate and is likely to touch 10 per cent,” the Maruti Suzuki India Chairman told agencies.
The Society of India Automobile Manufacturers (SIAM) welcomed the move, with the industry body’s president calling it a “timely move.”
For Hyundai India, 60 per cent of the Korean automaker’s India-facing ICE vehicles now fall under the new 18 per cent slab.