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Summary is AI Generated. Newsroom Reviewed
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GST rates for cars may drop from 28% to 18%, benefiting the automobile sector significantly
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Around 90% of items in the 28% GST slab could be moved to the 18% slab
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Small cars like Maruti Suzuki Wagonr, Baleno and Dzire could become Rs 60,000-80,000 cheaper
The upcoming reduction in the goods and services tax rates has been one of the most focal talking points recently, with huge positives seen for the automobile sector. It is estimated that 90% of the items in the 28% slab will be moved to the 18% slab. GST rates for cars are set to reduce from 28% to 18% and that will lead to significant savings on all new purchases. But how much is the actual savings on the on-road price for you as a buyer, and how much will your EMI fall by?
The upcoming reduction in the goods and services tax rates has been one of the most focal talking points recently, with huge positives seen for the automobile sector. It is estimated that 90% of the items in the 28% slab will be moved to the 18% slab. GST rates for cars are set to reduce from 28% to 18% and that will lead to significant savings on all new purchases. But how much is the actual savings on the on-road price for you as a buyer, and how much will your EMI fall by?
According to brokerage firm Nomura, the impact of GST reduction is seen across some key models. The chart below shows the cut in GST rates for popular models across passenger cars right now. The smaller cars currently attract GST of 28% and if the rate reduction proposal is passed, it could reduce the tax on some popular models like Maruti Suzuki Wagonr, Baleno and Dzire. For SUVs, the rate reduction is expected from 45% currently to 40%. These will help consumers with a reduction in price of models like Maruti Suzuki Breeza, Hyundai Creta and Mahindra XUV 700. This is not an exhaustive list and only include some key models in focus.
Car Prices Set To Reduce
Let’s put the spotlight on how car prices will see a reduction due to this potential GST rate cut. As you can see, prices of small cars like Wagonr, Baleno and Dzire will be cheaper by roughly Rs 60,000-80,000 while SUV makers will see a higher variance due to cess rates as well.
Maruti Suzuki Breeza will get cheaper by almost Rs 40,000 while the Mahindra XUV 700 will see a whopping Rs. 1.1 lakh reduction. These reductions come at a key time for the auto industry, given the slower growth across segments. While the SUV space has been driving the growth, that segment has also started to see a slowdown barring M&M. Hence, we have seen the overall growth in auto industry being flat while the fight for market share has started to prop up.
Your EMI Set To Reduce!
Given the reduction in price of the cars, lets look at how the monthly EMI installments will be reduced on the following models:
Among smaller cars, the EMI of Dzire will reduce to Rs 14,195 versus Rs 15,519 at present, whereas the EMIs for Wagonr and Baleno will come down by Rs 1,000-1,200.
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