With the restructuring of the Goods and Services Tax (GST), all types of cars in India, from hatchbacks to sedans, SUVs and MPVs, are set to get cheaper. Even popular models like the Maruti Suzuki Swift, Volkswagen Virtus, Maruti Suzuki Brezza, Mahindra XUV700 and Toyota Innova Crysta will witness price cuts.
The price reduction could be as high as 9% for select cars, the industry experts believe. Let us discuss how much the price of some popular models will be under the new GST 2.0 regime.
According to Crisil Intelligence, the entry-level WagonR could see a price cut of 8.6% in its base variant to Rs 5.29 lakh (ex-showroom). A similar price cut could result in the Swift coming down to Rs 5.93 lakh (ex-showroom) and the Dzire to Rs 6.25 lakh (ex-showroom), with respect to their base variants.
For the Creta, Brezza and Virtus, the price drop could be 3.6%. In such a scenario, the base variants of the Creta, Brezza and Virtus could start at Rs 10.71 lakh, Rs 8.37 lakh and Rs 11.14 lakh, respectively. All the prices are ex-showroom.
The relatively bigger models like the Mahindra XUV700 and the Toyota Innova Crysta could become affordable by 6.8%, if we talk about their base variants. The Crisil Intelligence report said that the Mahindra XUV700 could now start at Rs 13.51 lakh (ex-showroom) and the Toyota Innova Crysta at Rs 18.64 lakh (ex-showroom).
Source - Crisil Intelligence
Under the GST 2.0 regime, all internal combustion engine (ICE) cars, meaning those that use engines powered by petrol, diesel or CNG, have been brought into the 18% and 40% slabs. The 18% slab has relatively smaller cars, such as hatchbacks, compact sedans and compact SUVs. All the mid-size and bigger cars, as well as luxury models, are in the 40% slab.
Earlier, all ICE cars were taxed at 28% GST. On top of that, there was a compensation cess of 1% to 22%, depending on the type of car, its length and engine capacity. Small petrol hatchbacks had a lower cess, while SUVs and luxury cars had the highest. This meant the total tax on some vehicles, especially luxury models, could go up to 50%. More often than not, this taxation system made cars in India more expensive than they were priced at in global markets.
In the GST 2.0 regime, apart from bringing cars under 18% and 40% slabs, the government has scrapped the compensation cess. This has resulted in the total tax being a single, clear figure now.
For the electric cars, the GST remains the same at 5% as before. Also, the hydrogen fuel cell vehicles (FCEVs) have been moved to the 5% slab from the erstwhile slab of 12%.
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