A recent proposal from the Centre to reduce GST tax slabs is expected to bring down car prices and lower EMIs for buyers. The plan, approved by a six-member group of ministers, could potentially decrease the GST on many car models from 28% to 18%, though the cess will vary depending on factors like car length, category, and engine size.

For car buyers, the expected savings could be substantial. Data from brokerage firm Nomura highlights the potential drop in prices for popular models. For instance, the Maruti Suzuki Wagon R could see a price reduction of around Rs 60,000, the Maruti Suzuki Baleno could drop by about Rs 75,000, the Hyundai Creta could see a reduction of Rs 55,000, and the Mahindra XUV700 could become cheaper by Rs 1.15 lakh.

The price drop is also expected to affect monthly EMIs. Nomura estimates that EMIs could decrease by Rs 600 to Rs 2,000, depending on the car model. For example, the Wagon R’s EMI could decrease by Rs 1,047, and the XUV700’s EMI could drop by Rs 1,935.

On Thursday, a six-member group of ministers approved the Centre’s plan to simplify the GST structure by reducing the number of tax slabs from four to two main categories. Under the new structure, essential goods would attract a 5% GST, while most other goods would fall under an 18% rate. However, ‘sin goods’ like alcohol, tobacco, and fast food would face a special rate of 40%, which could also apply to some car models.

Finance Minister Nirmala Sitharaman emphasized that this rate rationalization aims to provide relief to the common man, farmers, middle class, and MSMEs while promoting a simplified and growth-oriented tax regime.

Image Source: NDTV News