Reduced costs for compact vehicles and motorcycles as GST Council endorses dual tax rate scheme
The Goods and Services Tax (GST) Council has announced a revised structure for vehicle taxes in India, aiming to provide a significant boost to the sluggish auto sector. The new structure features two broad categories: 5% and 18%, with the abolition of the 28% tax slab for vehicles.
Under the new structure, small cars under 1,200 cc and two-wheelers under 350 cc will be taxed at a lower rate of 5%. This reduction is expected to make these vehicles more affordable for a larger number of consumers. Three-wheelers, previously taxed at 28%, will now be taxed at 18%.
However, luxury cars and two-wheelers will be taxed at a rate of 40%. Mid-size and large cars, as well as motorcycles exceeding 350 cc, are included in this higher tax bracket. Buses, trucks, and ambulances will continue to be taxed at a lower rate of 18%, offering relief to these essential service providers.
The responsibility for the revision of GST tax rates in India was taken over by the GST Council. In addition, the compensation cess previously levied on vehicles will be abolished. This move is expected to further reduce the overall tax burden on vehicles.
The tax rationalization occurs during the festive season, which is traditionally a high purchase sentiment period in the auto sector. The reduction in taxes should encourage consumers to make purchases, potentially leading to an increase in sales for the auto industry.
While the revised GST structure offers promising news for the auto sector, further clarity is needed on how the tax will be levied and how much of the benefits will be passed on to customers. Information about upcoming electric vehicles and cutting-edge technology transforming the automotive landscape is available, indicating that the future of the sector is promising.
Some of the upcoming cars and bikes in India include the VinFast VF e34, Hyundai Stargazer, Tata Altroz Racer, MG Baojun 510, Lamborghini Huracan Evo Spyder, and Lamborghini Huracan STO. These new models are expected to attract a significant amount of attention and potentially boost sales in the coming months.
In conclusion, the revised GST structure for vehicles in India is a step towards making vehicles more affordable and potentially stimulating the auto sector. However, it is important to monitor the implementation of the new structure and its impact on consumers and the industry.
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