If you're planning to buy a new car or motorcycle, then you may have to pay more once the Goods and Services Tax (GST) is implemented. Under the new tax system, an additional cess will be imposed.
Small petrol cars with engine capacity of 1,200cc or less will attract an additional one percent cess. The diesel vehicles with engine capacity of 1,500cc or less than that will get three percent additional cess.
Sports utility vehicles, luxury cars and larger sedans will be benefited from the new GST scheme. Even after the additional 15 percent cess, the total levied tax will be less than the currently imposed tax.
In the two-wheelers segment, the motorcycles with engine capacity of more than 350cc will be imposed with an additional three percent cess. The same amount of cess will be levied on private aircraft and yachts.
As per industry experts, the implementation of the additional cess in the entry-level segment will result in hampering the growth of the country as a manufacturing hub for small cars.
The automobile industry is also seeking clarity on the taxes applied to the auto components. The Finance Minister had stated that the industrial intermediates would be taxed at 18 percent. But it is not yet clear whether the auto parts fall under this category.
Chairman of Maruti Suzuki, RC Bhargava said that impact of GST on vehicle prices would be clear only when the final prices are announced for different segments of vehicles. The prices are likely to benefit the premium end of the market.