Car prices saw a dip post the implementation of Goods and Services Tax (GST). After the new tax regime came into effect on July 1, 2017, manufacturers were quick to pass on the benefits to the end customer, hoping to boost sales. However, State levied Road Tax marginally reduced the GST benefits. Now, select range of vehicles are about to witness a hike in cess soon which would result in increase in the prices.
The prices of mid-size, hybrid and luxury vehicles are about to go northward as the Lok Sabha has passed the GST (Compensation to States) Amendment Bill, 2017 which will lead to increase in cess from the current 15% to 25%. The bill is aimed at increasing funds to compensate states for revenue loss following the rollout of GST.
The Bill is aimed to replace the Ordinance which was issued in September to give effect to the decision of the GST Council. As aforementioned, the Ordinance provided for a hike in the GST cess on cars from mid-size to hybrid variants and the luxury vehicles to 25 per cent.
The increase in GST, which will eventually result in increased prices, may affect the sales of the affected range of vehicles.
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