The Next Gen GST reforms announced by Finance Minister Nirmala Sitharaman earlier this month have come into effect from September 22, with these, vehicles and motorcycles with engines up to 350 CC will see a tax reduction.
These vehicles, which earlier came in the 28% tax slab, have now come down to the 18% tax bracket. With this entry-level vehicle will become more affordable.
Two-wheelers above 350 CC and bigger cars have come down to the 40% slab for luxury goods, as per the new reforms. Meanwhile, electric vehicles will remain in the 5% tax bracket.
Tax on small cars
Cars with petrol engines up to 1200cc or diesel engines up to 1500cc, and a length of no more than 4000 mm, are classified as small cars. These vehicles will now be taxed at 18% GST instead of the previous 28%, meaning models like the Alto and i10 will become more affordable.
Tax on bigger cars
With this, the cars that don’t meet the criteria for smaller cars will be taxed at 40%. As per the previous tax rate, 28% tax was imposed, plus there was a cess of up to 22%, thus a total of nearly 50%. That will now be changed, and an overall tax of 40% will be imposed.
Also read: A guide to how GST 2.0 changes your spends
Companies announced new prices.
Following the announcement about GST rate cuts, several car companies also announced reduced prices for their vehicles, including Mahindra, Maruti Suzuki, Jeep and Tata Motors.
Tata Motors
First to announce the reduced GST prices, Tata Motors announced a cut in prices by up to ₹1,55,000. In this, Tiago saw a price cut of up to Rs. 75,000, while Tigo saw a price reduction of up to Rs. 80,000. Further prices were reduced on Altroz, Punch, Nexon, Curvv, Harrier and Safari.
Mahindra
SUV maker Mahindra announced the price reduction on its major car models to pass the benefits of the GST rate cut. Mahindra’s Bolero, Bolero Neo, XUV 3XO and Thar 2WD (Diesel) fall in the 18% tax bracket, while the rest will attract 40% GST.
Maruti Suzuki
Maruti Suzuki also made a similar announcement in which the entry-level Alto K10 was made cheaper by ₹1,07,600, priced at RS 3,69,900. Similarly, Grand Vitara became cheaper by the same amount, priced at Rs. 10,76,500.
Renault
Car maker Renault announced a reduction of up to ₹96,395. The price of Kiger was reduced from Rs. 11,29,995 to Rs. 10,33,600. The prices of Kwid Climber were reduced from Rs. 5,90,000 to Rs. 6,44,995.
Jeep
Jeep India also revised prices of their SUV lineup, passing the benefits of GST to consumers. The updated prices reflect reductions of up to ₹4.84 lakh. For the Jeep Compass, the old price of ₹18.99 lakh was changed to ₹17.73 lakh. Jeep Meridian’s price was also reduced from Rs. 24.99 lakh to Rs. 23.33 lakh