GST Rate Cut Expectations Impacting Car Sales During Festive Period

The automotive market is witnessing a subdued festive season, a stark contrast to the usual boom. Automobile dealers report a decline in bookings and showroom visits, with a drop of up to 25 percent since the second week of August. This downturn is largely attributed to the expectation of a GST cut. Currently, cars are taxed at up to 28 percent GST. However, there is speculation that the government is considering reducing the tax to 18 percent, which would directly lower car prices. This has led customers to postpone their purchases, hoping to benefit from the potential tax relief. The GST Council is scheduled to discuss the matter in October. A potential new structure could lead to reduced GST on smaller and mid-segment cars, while luxury vehicles might face a higher tax rate. The automotive industry’s performance during the festive season hinges on the government’s decision regarding GST.