GST Impact On The Automobile Market Of The City So Far

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GST Impact On The Automobile Market Of The City So Far

Rahul Chanda | August 19, 2017 17:37 hrs

Right after the Goods & Services Tax (GST) was rolled out across the country, people were apprehensive that luxurious items would become dearer with 28% GST attached to it. Confusion prevailed among vehicle customers in Guwahati and some are wondering even today about how the automobile industry will perform and what will be the impact of GST on the entire industry. G Plus talked to many stakeholders to find out the impact of GST on the automobile market of the city. 

 

The registration

 

The District Transport Officer (DTO), Kamrup Metro, PK Ghosh, talking to G Plus said, “There is not much impact of GST on the industry as the figures of vehicle registration are almost the same and the dealers and the car companies can explain about the tax slabs better.” He said that the GST has just been implemented and things are yet to become fully clear but the registration of vehicles has more or less been the same as it was before. And if there has been any decrease, the reasons might be the floods and other problems.         

 

A joint commissioner level officer in the office of the Commissioner of Transport, talking to G Plus, said that there has been no impact of GST as such till now. But he added that since the sub-dealers had to acquire GST registration (GSTIN) and with the problems being faced due to the floods there might have been a small dip in the registration figure for the month of July.

    

According to the data extracted from the office of the Commissioner of Transport it seems there has been a sharp dip in the registration figure. So have the prices gone up? 

 

 

The dealers

 

The implementation of GST in India from July this year has received mixed reactions but the one sector that rejoiced was the automobile industry and for good reason. The GST rates did away with a lot of tax slabs that burdened the automotive companies for years and most car and bike prices saw a big fall. In fact luxury cars and SUVs benefited a lot, thanks to the cap in the tax. Under the GST rates, cars will attract the top rate of 28% with a cess in the range of 1-15%. Similarly, even for two-wheelers, the tax slab for bikes below 350 CC has gone down and tax slabs for bikes above 350 CC has not gone up too high. Interestingly, some bike manufacturers have reduced the prices of their above 300 CC bikes. 

 

Two-wheelers

 

General Manager of Unnati Motors, Bijoy Pathak, talking to G Plus said that the rates of bikes have reduced. Previously there used to be many taxes like Excise (12.5%), CST (2%), Vat (15%) and at the end, the total tax charged on one bike used to be somewhere around 29.5%. He further said that now there is a flat GST of 28% and after that an extra 3% cess is charged on two-wheelers that have engine capacity of 350 CC. So the tax has reduced on bikes below 350 CC by 1.5%, and there is a 3% tax increase on bikes with engine capacity of more than 350 CC. Sales Manager at Bajaj Auto, Yogesh Kumar Pandey, talking to G Plus said that GST has been a very good move for the automobile industry as previously the tax structure was different in all the states and many taxes used to be levied on vehicles but now there is only one tax and people are getting the benefits. He said that Bajaj has a bike of 400 CC (Dominar), and Bajaj Auto has reduced the price of that bike by Rs 5,500. 

 

A source in the Honda bike showroom, talking to G Plus, said that the prices of all the bikes have fallen by around 2% because of the tax slab decrease and the customers are getting the benefits directly. He said that the sales figures might have reduced because of the season, floods etc and even some sub-dealers took time to get their GSTIN, but there has been no impact of GST, the same proving beneficial to customers. 

 

Saraighat Riders Brand Champ, Indranil Thakur, talking to G Plus said that the price of 350 CC Royal Enfield bikes has reduced by around Rs 2,400 and 500 CC bikes have increased marginally by Rs 800 to Rs 1,000. This has not affected the customers because the craze for Royal Enfield bikes is increasing. 

 

Regional Branch Head of Yamaha, Rekib Hassan, said that Yamaha has all its bikes under 350 CC and the prices of all the bikes have reduced by 2.5% to 3%. He said that there has been no impact of GST as sales have increased for them. Regional Manager of Suzuki, Bitupon Dutta said that rates have come down and there is no impact of GST. Even Area Manager of TVS North East, Shitanshu Verma said that the rates have gone down. So the two-wheelers rates have gone down for bikes below 350 CC and some manufacturers have reduced the price of bikes above 350 CC. 

 

Four-wheelers

 

A source in the Sales Tax department, talking to G Plus, said that after the implementation of GST, the automobile industry has gained as the tax slab has reduced for four-wheelers and customers are getting benefited. He said that previously there were many taxes like Excise, NCCD, VAT, CST, MV cess, Infra cess and Freight Duty, but now there is one flat GST of 28% and an extra 1% to 15% cess depending on the type of vehicles.

 

General Manager of Mukesh Hyundai, Saurav Modi, talking to G Plus said that petrol cars under 4 metres up to 1.2 litre engine (1200 CC) have an extra compensation cess of 1% after 28% flat GST, diesel cars under 4 metres up to 1.5 litre engine (1500 CC) have an extra compensation cess of 3% after 28% flat GST. He said that other higher category cars have a compensation cess of 15% after 28% flat GST. He said that previously after all calculations taxes charged on vehicles used to be around 48% whereas now even the high-end cars have a tax levy of 43% after 15% compensation cess. He said that the prices of all the vehicles have decreased and customers are benefitting accordingly. He said there is a decrease of around Rs 75,000 on Hyundai models like Creta. 

 

General Manager of Fiat, Bipul Hazarika, said that there has been no impact of GST as such as sales are somewhat similar to earlier months. He said in some of the car models of Fiat, the rates have decreased and in some models the rates have increased a bit but the difference is minimal. 

A source in Maruti, talking to G Plus, said that the prices have decreased on all the vehicles and there is a positive impact of the implementation of GST as the customers are getting benefitted. 

 

Sales Manager of Chand Ford, Partha Pratim Mohan, said that the rates of Ford vehicles like Endeavour have reduced by around Rs 2 lakhs, EcoSport by Rs 27,000, Aspire Figo by Rs 20,000. He further said that at present there is no clear picture about what the impact of GST is but the prices have absolutely come down. 

 

Meanwhile, General Manager of Renault Guwahati Metropolitan, Raj Singh, said that the prices of Renault cars like Kwid have come down by Rs 5,000 to Rs 25,000, Duster by Rs 60,000, Lodgy by Rs 1 lakh and sales have doubled after GST. He also said that all the customers were given the GST benefits and it is a very good move for the industry. 

 

Meanwhile, according to media reports, the move to hike ceiling of cess on large cars and SUVs to 25% under the new GST regime would impact growth of advanced global models in India and could come in the way of the country becoming a global hub for automobile production, according to Japanese auto major Honda. Actually, according to industry experts, the maximum cess which is 15% now is likely to be increased to 25%. If the government increases the cess to 25% for high-end cars, then the GST might have a negative impact on such cars, the experts feel. But for the time being, till the maximum cess is 15%, it is a hugely beneficial move for the customer and in this respect, GST looks like a decent tax reform.

  • GST implementation has brought down prices of all vehicles
  • However, a sharp dip in vehicle registration has been noticed in July
  • Department officials attribute this to the demanding season, floods, etc.
  • All car and two-wheeler dealers vouch for GST being a good tax reform that is benefitting customers
  • The proposed of the ceiling of cess for large cars from 15% to 25% might have an adverse effect
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