The Central Government is readying to implement the Goods and Services Tax (GST) from July 1, 2017. With the GST implemented, there is bound to be changed in the pricing of goods and services.
Automakers have been reassuring their dealers by compensating the losses incurred due to the implementation of GST.
Maruti Suzuki India Limited (MSIL), Bajaj Auto Limited and Hyundai Motors have sent notices to their respective dealers offering to absorb the losses incurred due to GST. More automakers are set to follow soon in the coming weeks.
There is a condition though. Automakers are urging dealers to achieve sales target to avail the compensation of losses incurred due to GST. Car and motorcycle dealers are expected to incur losses of close to 2.5 to 5 percent on the basic price of inventory when the GST becomes effective.
Taxes have already been paid on stocks lying at dealerships which are non-refundable as they do not come under the new GST slabs, but current sales will be taxed as per GST norms from July 1, 2017.
India's largest carmaker, Maruti Suzuki has sent notices to its dealers promising to absorb the losses on all vehicle despatched post-January 2017.
Maruti's current favourites Vitara Brezza and Dzire sedan will not come under the compensation. Both the vehicles command a lengthy waiting period and dealers are capable of liquidating their stocks immediately.
Bajaj Auto also has sent a notice dealers on June 5, 2017, offering compensation for unsold inventory for three months before GST is implemented.
The South Korean carmaker, Hyundai Motors India has announced adequate compensation for losses. However, automakers are not extending the said compensation on spares as it comes with sufficient profit.