A recent government announcement regarding reduced GST on cars is set to benefit consumers, leading to potentially lower car prices. Automakers are swiftly adjusting their pricing structures to reflect the new GST 2.0 rates, which will be implemented from September 22nd. This development has prompted inquiries from prospective car buyers, specifically those who have already placed orders, regarding the applicability of these new rates.
Buying a car is a significant investment, often involving careful planning and, in some cases, extended waiting periods. Many car models have high demand, requiring customers to pre-book to secure a purchase. With the festive season approaching, many consumers may have already booked vehicles for delivery during Navratri. These buyers are now contacting dealerships to understand whether they will be able to take advantage of the reduced GST.
Will Early Bookings Benefit? Yes, customers who take delivery of their cars on or after September 22nd will benefit. The sales executive from Maruti Suzuki explained that the revised GST rates apply at the time of final billing, coinciding with the delivery date. Therefore, all customers who take delivery on or after September 22nd will receive the benefit of the new GST rates, regardless of when they booked their vehicle.
What About Deliveries Before September 22nd? Those taking delivery before September 22nd will not be eligible for the reduced rates, they will be subject to the older, higher GST rates. The Federation of Automobile Dealers Associations (FADA) reported that sales in August were impacted as many consumers delayed their purchases anticipating the GST reduction. This was in response to the ‘GST 2.0’ announcement.
Smaller Cars: Big Savings
Smaller petrol and CNG cars with engines up to 1200cc and a length of up to 4000mm will now have an 18% tax rate, down from 29%. This will make models like the Maruti Suzuki Alto K10, Maruti Suzuki Swift, Hyundai i20, Renault Kwid, and Tata Tiago more affordable. Similarly, diesel cars with engines up to 1500cc and a length up to 4000mm will see their tax rate fall from 31% to 18%. This includes cars such as the Tata Altroz and Hyundai Venue.
Larger Cars: Reduced, But Still Higher Tax
Larger petrol and diesel cars will still have a higher tax rate compared to smaller cars, but the overall tax burden will be reduced. Petrol cars with engines above 1200cc and a length exceeding 4 meters will have a 40% tax rate, down from 45% (including 28% GST and 17% cess). This category includes vehicles like the Maruti Suzuki Brezza, Maruti Suzuki XL6, Hyundai Creta, and Honda City. Diesel cars with engines over 1500cc will have a 40% tax rate, a reduction from the previous 48% (including a 20% cess). Examples include the Tata Harrier, Tata Safari, Mahindra Scorpio-N, and Mahindra XUV700.