The proposed GST changes in India are set to impact the automotive sector, with potential benefits for small car buyers and increased costs for luxury vehicle owners. The suggested reforms include a revised GST structure, potentially lowering taxes on essential goods and increasing taxes on luxury items. Under the new framework, small cars could be placed in the 18% tax bracket, offering significant savings compared to the current 28% GST plus a 1% cess. This could lead to price reductions for vehicles meeting specific criteria, like a length of up to 4 meters and an engine capacity under 1200cc. Conversely, large cars and SUVs may face a 40% special tax, which could increase their prices. Currently, these vehicles attract a combined tax of 43-50%. Electric vehicles (EVs) will continue to benefit from a low 5% GST rate.
