The Indian automotive market is anticipating significant changes related to the Goods and Services Tax (GST). The government is considering reforms to simplify the GST structure, potentially including lower tax rates. This could result in lower prices, particularly for smaller and mid-size vehicles. This analysis provides a glimpse into how potential GST cuts could affect car prices, especially for models like the Creta, Venue, Exter, and i20. Currently, small cars are taxed at 28% GST, plus a 1% cess, for a total tax burden of approximately 29%. A reduction to 18% could provide consumers with a direct 10% tax benefit, leading to reduced car prices. For example, a car with an ex-factory price of ₹5 lakh could cost ₹6.45 lakh under the current tax structure. If the new structure is implemented, the same car might be available for around ₹5.90 lakh, giving the customer a benefit of about ₹55,000. A reduction of GST from 28% to 18% will likely result in noticeable price decreases. The Hyundai Exter, with a starting price of ₹5,99,900, currently has a tax component of ₹1,73,971. If the GST is reduced, a savings of roughly ₹59,990 can be expected. The Hyundai i20, priced at ₹7,50,900, could see a price drop of about ₹75,000. The Hyundai Venue, priced at ₹7,94,100, may provide savings of approximately ₹79,400. The Hyundai Creta, one of India’s most popular SUVs, currently starts at ₹11,10,900. With GST cuts, buyers could save approximately ₹1,11,000. Middle-class buyers looking to purchase new cars within their budgets will likely experience the most significant benefits. Savings on hatchbacks and compact SUVs could range from ₹60,000 to ₹80,000.
