To new purchasers, the revision of GST is a direct relief. The mid and small cars will receive only 18 per cent GST, as opposed to the previous 28 per cent, and the cars will have no cess at all. This would mean maximum savings for budget-conscious patrons- a massive victory in a market whose central theme is affordability.
There is also a gain in luxury car consumers. Although the GST on cars that exceed 1500cc has now graduated to 40, the elimination of the cess will secure general savings of five to ten per cent.
In essence, be it a hatchback buyer in the 6-10 lakh bracket or a luxury SUV client, both sets will register a lower on-road cost.
EV buyers are not taxed in the sense of GST, so the rate will remain at 5%. But as ICE car rates decrease, the comparative price difference between EVs and traditional cars decreases a bit.
Current proprietors: Reduced operation and maintenance costs
Indirect, though significant, savings accompany the reforms to the existing car owners. The spare parts GST has been removed and decreased to 18%. This implies that periodic servicing, repairs, and replacement of major parts of the car, such as tyres, braking systems and steering systems, will be cheaper in the long run.
The cheaper servicing will also help commercial vehicle operators, who will now save on new trucks and buses with the reduced GST of 18%. The GST has been reduced significantly to 5% which will reduce the cost of owning and maintaining tractors and farm equipment.
The downside of high-end motorcycle owners is, that the bikes over 350cc are now subjected to the 40% rate of GST, making those who want to own better two-wheelers pay more.
Bottom Line: Buyers Benefit Now, Owners Benefit Long-Term
The rationalisation of GST is a win-win event. The new buyer would save initial money and make cars cheaper this festive season. In the case of owners who already own the vehicle, it reduces the cost of ownership in the long term due to repair and spare costs. These combined measures should work to increase confidence and kick-start the auto industry into a higher growth curve.
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