New GST Rates Will Mean Cheaper Small Cars And Even Bigger SUVs

Cars under 4m with engines below 1200cc will see reduced rates, potentially lowering prices. Larger cars above 4m may also experience price cuts due to cess reductions.

The 56th GST council meeting resulted in revised GST rates for cars, effective September 22nd.

Source : PTI

The 56th meeting of the GST council was held on September 3 and the changes in Goods and Services Tax (GST) rates will be implemented from September 22. Hence, in this new structure, the current slabs for cars are done away with while new cars below 4m are moved to 18 per cent from the current 28 per cent. 

This means compact cars would be cheaper and will bring a boost to the industry. Cars which are below 4m are subjected to these rates. These are for cars not exceeding 1200cc engines and 4000mm. 

There are many such cars which fall into this bracket like the Baleno from Maruti and all of its other small cars while even subcompact SUVs below 4m like the Hyundai Venue would be cheaper now. 

Now, let's bring larger cars into the focus which are above 4m like the Hyundai Creta or the bigger SUVs like the Fortuner where the rate has increased to 40 per cent from 28 per cent but regarding cess which was levied earlier, there is also a rate cut from 50 to 40 per cent. 

This could mean a price cut for cars above 4m also. Hence, this means that this structure will mean a simplified and a reason for cheer for the auto industry. 

Despite the festive season incoming, many buyers are withholding their car purchases in anticipation of a price cut and this will mean affordable cars going forward. However, Electric vehichles (EV) could be expensive now and that could dampen the EV segment in India. Overall, while we await how much cars would be cheaper in the coming days, there is no doubt that the biggest gainer is the small car and SUV space with reductions upto a lakh.