Car and motorcycle showrooms are now obligated to display posters showing the new prices under GST 2.0. These posters must present both the old and new prices and include a photograph of Prime Minister Narendra Modi. The Ministry of Heavy Industries (MHI) has instructed car and two-wheeler manufacturers to display these posters at all their dealerships. The posters are intended to illustrate the price differences resulting from the recent modifications to the Goods and Services Tax (GST).
This order was delivered to the companies through the Society of Indian Automobile Manufacturers (SIAM). The ministry also specified that the posters must contain an image of Prime Minister Narendra Modi. Consequently, automobile companies are preparing posters and are seeking approval from the ministry.
The new GST rates will be implemented starting September 22.
The introduction of GST 2.0 in India is directly influencing the pricing of cars. The new tax framework establishes just two tax slabs for cars: 18% and 40%. Smaller cars, defined as those with petrol or CNG engines up to 1200cc, diesel engines up to 1500cc, and a length of less than 4 meters, will now be subject to only 18% GST. Previously, these cars were subject to 28% GST plus a 13% cess, leading to a combined tax of approximately 29-31%. This tax has been reduced to 18%. Large and mid-size cars and SUVs (engines exceeding 1500cc, longer than 4 meters) will now be taxed at 40% GST. Previously, they faced 28% GST plus a 15-22% cess, resulting in a total tax burden of around 43-50%. This category also benefits from a reduction in tax of 5-10%.
Two-wheelers are also set to become more affordable.
The implementation of GST 2.0 in India is significantly affecting the two-wheeler market. The government has introduced new tax rates, which have decreased the prices of smaller scooters and bikes, making them more accessible to consumers, while premium and high-end bikes have become more expensive. Under the new system, bikes up to 350cc and all scooters will be taxed at only 18% GST. Previously, they were taxed at approximately 31% (28% GST + 3% cess). Bikes with engines above 350cc will now be taxed at 40%. They were previously subject to approximately 31% tax.