New Delhi: The new Goods and Services Tax (GST) system is expected to bring down car prices by a considerable amount. Wait, it will become a reality only in April 2017 when the new tax system is implemented by the Union Government and the states in India.
Now the tax rate for compact cars is 25% and the proposed new GST tax rate would be 18%. Think of a reduction of 7 % in the price of a car.
Maruti Suzuki Ciaz and Renault Duster cars are loaded with a tax burden of 40% now and the new GST tax rate would be around 20%. That means a massive reduction in the price of big cars.
Luxury cars could be taxed at about 40% under the new tax regime and buyers are expected to get a minimum of 10% reduction from the present rate.
Naturally, buyers who hold their purchases till then will save a lot, sometimes to the extent of Rs 2 lakhs.
Car manufacturers are scared of such a scenario.
The new GST is good for them in the long run because they can sell cars at cheaper rates from April 2017.
But the manufacturers are a worried lot these days.
What if most of the prospective buyers postpone their car purchases to April 2017?
That is a possibility and showrooms may have to wait for customers for months.
