In the proposed new reform of GST, those who buy small cars are likely to get relief. The government is considering distinguishing tax rates for small and big cars. According to government sources, small cars, which are currently applied to 28 per cent GST and 1-3 per cent of the minor cess, can come in the new system of 18 per cent in the new system. In the report of Indian Express, sources have been quoted as saying that after removing the slab with a rate of 28 per cent, more than 40 per cent tax can be levied on big luxury cars and SUVs. The media report quoted the source as saying that small cars are not a luxury item. On the other hand, those who buy bikes are also expected to benefit from this new reform.

There can be change in tax on cars

First, if we talk about cars, the entry-level hatchback, small sedan and mini-SUV are currently applied to 28 percent GST as well as 1 to 3 percent cess. For example, engine capacity up to 1200 cc and small cars with less than 4 meters length fall into a tax slab of 28 per cent, and they are charged 1 per cent (petrol) and 3 per cent (diesel) cess. Which can be proposed to increase 18 percent.

In fact, the tax rate on mid -size cars is also likely to decrease slightly as the maximum rate is proposed 40 percent in the new GST system. Currently, mid -size cars with engine capacity more than 1200 cc (petrol) or 1500 cc (diesel) have a cess of 15 per cent in addition to GST, which means the total tax is 43 per cent. It is expected to decrease to 40 percent.

Luxury cars with more than 1500 cc engine capacity and large engine capacity and SUVs with more than 4 meters length, which currently costs 20 to 22 per cent cess in addition to 28 per cent GST, can be levied to keep the tax rate similar to the current time.

Bikers will also benefit

On the other hand, motorcycles of entry level are also expected to benefit from this. The 350 cc bike currently features 28 percent GST, which can be reduced to 18 percent, while bikes of more than 350 cc may cost 40 percent GST. Currently, bikes with engine capacity more than 350 cc have 3 % cess with 28 percent GST, which makes the total tax 31 percent.

Market of cars may change

Industry sources said that car manufacturers can consider launching cars less than 1200 cc in the market so that the GST rate can be reduced from 28 per cent to 18 per cent. The Indian Express quoted a source of the industry as saying that the discussion has started since the announcement of the proposed GST reform. If they have to bring cars under the new tax structure after six months, then the plan will have to be started now.