It’s important to understand the role and implication of levying of the GST rates on different cars in India. That being said, the way GST rates are applied on cars differs in the context of car’s classification as well as the fuel type.
But first up, some background.
The concept of GST rates was propounded by the honorable government of India in order to establish a uniform tax structure throughout the country.
It came to be known as a form of indirect tax that ultimately replaced several cascading taxes that had been levied by both state and central governments.
But that said, let’s visit the GST rates on car category and fuel type:
A) Car category
The GST on Cars, rates would differ based on small, mid-size, luxury, SUV and Electric vehicles.
But first up, what GST rates apply for small cars? GST for Small cars such as the Tata Tiago, Hyundai Grand i10, Maruti Suzuki Swift, and Volkswagen Polo will attract a tax of 18%, this is in comparison to 28% that was applied earlier.
Similarly, GST on mid-size cars such as Maruti Baleno, Tata Nexon, Honda Amaze, and Nissan Kicks will enjoy a drastic reduction of tax, this being 18% having been 39% in the past.
Furthermore, GST on Luxury cars such as Land Rover, Lamborghini Aventador, Bugatti Chiron, and Land Cruiser will require owners to shell out GST up to 28%.
That said, the GST on SUVs such as Jeep Compass, Maruti Vitara Brezza, Renault Duster and the likes will require owners to pay a 28% GST, which is around a 17% reduction from the rates previously.
GST On Electric cars will be levied a tax rate of 12%.
B) Fuel type
This category has further been divided into four sub-categories, which include- Sub 4-metre, larger than 4-metre SUVs, larger than 4-metre non SUVs, and electric cars.
First up, Sub-metre cars:
Petrol engines less than 1.2 litres- the most popular car segment in India, that includes cars such as Maruti Suzuki Dzire, Hyundai Grand i10, Toyota Etios Liva, Volkswagen and the likes have been levied a GST up to 29%.
GST on Diesel engines more than 1.5 litres– this category includes cars like Hyundai i20, Ford Ecosport, Maruti Suzuki Vitara Brezza, which will attract a GST up to 31%.
GST on Petrol engines more than 1.2 l and diesel engines less than 1.5 litres– cars in this category, such as the subcompact sedans and subcompact SUVs will attract a tax equal to 43%. This is a 17 per cent reduction that what was levied previously.
That being told, we move to the larger than 4-metre SUVs– this includes SUVs with petrol and diesel engines such as Tata Hexa, Mercedes Benz GLC, Mahindra Scorpio and the likes which will attract a tax of 43%.
GST on Larger than 4-metre non-SUVs– this category, including hatchbacks such as Honda City and Maruti Suonzuki Ciaz will attract a tax equal to 43%.
Finally, electric cars such as the Mahindra eVerito, Mahindra e20 will be required to pay only 12% in the current GST tax system.