As speculated, the premium and luxury cars segment may get a cheap turn and will be approachable after the GST roll out. Reason being for this point may emerge after the said taxes like excise duty, value added tax, state level taxes such as Octroi, local body tax and cesses are going to dissolve. The benefits can emerge up to 4 to 12 percentage points lower than the current one levied.
Still, the chances of getting stable prices even after GST implication can continue as the manufacturer hold the right to raise to increase the prices and also the states can levy various another cess which might ultimately put the luxury cars segment in the again old bracket of prices.
As known, the cars which elongate more than four meters and has engine capacity above 1500cc comes under the luxury car segment, which currently imposes an excise duty of 27 percent. Not only high-end car-makers like Mercedes-Benz India Pvt. Ltd, Audi India Pvt. Ltd and BMW India Pvt. Ltd is the race of benefits, but also the other premium luxury cars from general car-makers are in the row to realize the benefits of upcoming GST.
The present tax scenario in case of high-end car buyers is levied up by a total duty of up to 55% of factory gate price (including 27% or 30% excise duty, a 12.5-15% value added tax (VAT) on base price plus excise and other cesses, 1% national calamity contingency duty, 1.8% auto cess, 1-4% infrastructure cess and another 4% Octroi/local tax in states such as Maharashtra). Now in the comparison of the previous scenario, the customer is likely to pay only 43 percent now after the application of GST which makes sense.
Shekar Viswanathan, vice-chairman at Toyota Kirloskar Motor Pvt. Ltd. Said that “I am not swearing by those numbers because the state governments can levy an additional duty, and also said that they will “pass on the benefit to the extent that it helps build volumes. One has to take into account the price to volume ratio.” Also while in discussion with the Roland Folger, managing director and president at Mercedes India Pvt. Ltd, he mentioned that “studying the proposed GST structure and it is premature to comment on the effect on the industry, till commodity-wise GST rates are not declared.”
Read Also: GST Impact on Automobile Industry in India
