Under GST 3.0, the automobile sector has received significant relief through low and simplified tax rates, which aims to promote the recovery of the industry in dull sales. The GST Council has combined the complex system in two slabs 5% and 18% while removing additional cesses on vehicles.
For diesel for small cars with 1200 CCs (petrol, LPG, and CNG) and small cars with engine capacity of up to 1500 cc, GST has been reduced to 18% compared to 28% plus cess, which has reduced the cost of access-level models.
Large cars and SUVs, on which the previous cess was taxed at an effective rate between 43% and 50%, now it will attract 40% GST flat. The removal of the cess not only reduced the total tax burden, but also the cost of the price, which has made the tax more transparent.
Industry experts believe that low cost double advantage and simplified tax levy can serve as a strong catalyst for vehicle sale, while NBFCs and banks in the semi-urban and rural markets can boost the purchase of credit.
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