Latest Updates 31 July 2019
Any services for hiring an electrically operated vehicle meant to carry more than twelve passengers provided to a local authority is exempt with effect from 1 August 2019.Pre-GST Tax Laws on Automobiles
Table showing the different types and rate of taxes levied on the passenger vehicles/SUV.| Segment | Excise | *Nccd +auto cess | VAT | *Road tax | *Motor vehicle tax | Total | CGST | SGST | TOTAL | Difference |
| Small Cars <1200cc | 12.50% | 1.1% | 14% | State based | State based | 28%(approx) | 9% | 9% | 18% | 10% |
| Mid-SizeCars from 1200cc to 1500cc | 24% | 1.1% | 14% | State based | State based | 39% | 9% | 9% | 18% | 21% |
| Luxury Cars>1500cc | 27% | 1.1% | 14% | State based | State based | 42% | 14% | 14% | 28% | 14% |
| SUV’s >1500cc, >170mm ground clearance | 30% | 1.1% | 14% | State based | State based | 45% | 14% | 14% | 28% | 17% |
Impact of GST on the Automobile Industry
The two taxes charged to the end consumer on car and bikes previously were excise and VAT, with an average combined rate of 26.50 to 44% which is higher than the GST rates of 18 and 28%. Therefore, there will be less burden of tax on the end consumer under GST.
Importers/dealers can cheer as they would be able to claim the GST paid on goods imported/sold whereas previously, they were ineligible to claim the excise duty and VAT paid. Excise paid on stock transfer would be covered by IGST under the GST law. Advance received for supply of goods will also be taxed under GST. GST would help the manufacturers in procuring auto parts at a cheaper cost due to an improved supply chain mechanism under GST.
GST on car and bikes are kept under the 28% bracket and a list of cess to be levied on a different kind of automobile has also been declared by the Indian government. Cess has been levied on different kind of automobiles ranging from 1 to 15%. We have created an infographic for an understanding of different cess rates applied on different kind of automobiles.
Latest Updates 30 September 2019
| Item* | Previous Rate | Current Rate |
| Cess on Petrol/CNG Motor Vehicles (Capacity of 10-13 passengers & engine capacity not exceeding 1200 cc) | 15% | 1% |
| Cess on Diesel Motor Vehicles (Capacity of 10-13 passengers & engine capacity not exceeding 1500 cc) | 15% | 3% |
GST will be beneficial for the people in the market for small family cars like Alto, Santro, Nano, Datsun Go as a minimum cess of 1% has been charged over and above the GST rate of 28%. Bikes which have an engine of greater than 350CC like Enfield 500CC or Harley Davidson etc would be charged GST at the rate of 28% and an additional 3% cess would be levied. It is difficult to understand the placement of yachts, aircraft, personal jets under the 3% cess bracket along with the small cars having engine >1200CC and <1500CC instead of the 15% cess.
There are a lot of free services/warranties offered by the car manufacturers due to the competitive nature of the industry. These free goods/services were not taxed under previous tax laws. Under GST, the free services/ warranties would also be eligible for taxation.
Conclusion
GST reduces the cost of manufacturing of cars and bikes due to the subsuming of different taxes levied previously. Under GST, the taxes would be charged on consumption state rather than the origin state, which would give a boost to the growth rate of the automobile industry.Simplify Your GST Filing & Invoicing
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