What is GST?
The GST will replace at least 17 state and federal levies, making the movement of goods cheaper and seamless across a market holding 1.3 billion consumers. It would be far simpler than the current system, where a good is taxed multiple times at different rates. The underlying principle is to tax goods at the point of consumption rather than production.
As GST is getting implemented from July 1st, let’s look at the advantages of GST bill in Automobile sector.
In Four wheelers Small size passenger cars and mid-size passenger cars get the highest price cuts due to low tax imposed on them after GST. SUVs and luxury cars get a low cut in price compared to small size and mid-size car segment.If we look at the price structure of ALTO K10, AMAZE, XUV 500 pre and post GST
(Small size cars)
|Price before GST||Rs. 3.49 lakhs||Rs. 5.77 lakhs||Rs. 12.68 lakhs|
|Price after GST||Rs. 3.24 lakhs||Rs. 4.77 lakhs||Rs. 12.04 lakhs|
Sedans would be obtained at a cheaper price with a steep price cut due to tax reduction from 39% to 18%.
Two wheelers price will be reduced by 6-7% which will translate into an amount of Rs.2200 to Rs.8700.
|Price before GST||Rs.46000||Rs.90000|
|Price after GST||Rs.43000||Rs.84000|
The trend among the auto industry is to pass the benefits to the customers.Through GST companies want to reduce their costs and pass on the benefits to customers. By reducing prices companies are expecting increase in their sales.
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