Amidst expectations of contributing 12 percent to the Gross Domestic Product in the next decade, the automobile sector is likely to be less affected under new tax regime of Goods and Services Tax. When the rates for different categories of cars and two-wheelers were announced, the industry bodies said the rates were fixed as per their expectation. India remains a high demand country for cars and GST rates are less likely to affect the current rate of taxes. However, those consumers who were expecting to move towards green technology, they may have to reconsider their decision after the Goods and Services Tax Council put electric vehicles in the highest tax slab of 28 percent.
Under the GST, cars will attract the top rate of 28 per cent with a cess in the range of 1 to 15 per cent on top of it.
While small petrol cars with engine less than 1,200 cc will attract 1 per cent cess, those with a diesel engine of less than 1,500 cc will attract 3 per cent cess.
Large cars with engine greater than 1,500 cc and SUVs with length more than 4 metres and engine greater than 1,500 cc will attract cess of 15 per cent.Hybrid vehicles will also fall in the category under GST. In comparison, tax on electric vehicles has been kept at 12 per cent.
Commenting on the rates, Society of Indian Automobile Manufacturers (SIAM) in a statement said, “The rates are as per the expectations of the industry and almost all segments have benefited by way of a reduced overall tax burden in varying degree.”
Hyundai Motor India director, sales and marketing, Rakesh Srivastava said, “The new GST structure seems to be a zero sum game for auto industry. The placement of green vehicles in highest slabs of GST is contrary to the spirit of promoting green mobility in India.”
(With inputs from PTI)