In a move set to shake up the automotive market, the GST Council has announced significant tax rate reductions on vehicles, particularly benefiting the SUV segment. The new tax structure, effective from September 22, promises to make SUVs more affordable for Indian consumers.

New GST Structure

Under the revised tax regime, small cars will now be subject to an 18% GST rate, down from the previous 28%. For larger vehicles, including SUVs, the tax structure has been simplified to a flat 40% without the additional cess, replacing the earlier system of 28% GST plus a 15-22% compensation cess.

Price Cuts Across Popular SUV Models

The impact of these tax cuts is already visible in the pricing of several popular SUV models:

Hyundai Creta, one of India's bestselling SUVs, sees price reductions ranging from Rs 38,311 to Rs 68,969, depending on the variant. The Kia Sonet, another popular compact SUV, becomes more accessible with price cuts of up to Rs 1.64 lakh.

Manufacturer Response

Kia India has taken a proactive stance, announcing that it will pass on the full GST benefit to customers across its entire vehicle range. This move is likely to boost sales and increase market competitiveness.

Benefits for Businesses

The new GST structure also brings good news for businesses. Companies can now avail full Input Tax Credit, which was previously limited to only the tax component. This change is expected to provide additional financial relief to corporate buyers and fleet operators.

Market Implications

These substantial price reductions are expected to stimulate demand in the automotive sector, particularly in the SUV segment. The timing of this decision, just ahead of the festive season, could lead to a significant uptick in vehicle sales.

The GST Council's decision to reduce tax rates on vehicles represents a major shift in India's automotive taxation policy. As manufacturers adjust their pricing strategies and consumers respond to these changes, the coming months are likely to see increased activity in the SUV market. This move not only makes SUVs more affordable for a broader range of consumers but also has the potential to boost the overall automotive industry in India.

Luxury carmaker Audi India has announced significant price reductions across its product portfolio, passing on the benefits of the recent GST rate cut to its customers. The move comes in response to the GST Council's decision to lower the Goods and Services Tax (GST) from 28% to 18% on various vehicles, including small passenger cars meeting specific engine and length criteria.

Price Reductions Across Models

Audi's price revisions, effective from September 22, range from Rs 2.64 lakh to Rs 7.8 lakh across different models:

The flagship SUV, Audi Q8, receives the most substantial price cut of Rs 7.8 lakh, bringing its new price to Rs 1.09 crore. The Audi A4 sees the smallest reduction of Rs 2.64 lakh, now priced at Rs 46 lakh.

Impact of GST Rate Cut

This price revision follows the GST Council's decision to reduce the tax burden on various vehicle categories. Previously, passenger vehicles were subject to a 28% GST rate, plus an additional cess ranging from 1% to 22% based on engine size and fuel type. The council's move to lower the GST rate to 18% for certain vehicle categories aims to stimulate the automotive sector.

Electric Vehicles and Tax Structure

Electric vehicles continue to enjoy a preferential tax treatment with a 5% GST rate, highlighting the government's push towards eco-friendly transportation options.

Audi India's decision to pass on the full benefit of the tax reduction to its customers is likely to make its luxury vehicles more accessible to a broader range of buyers. This move may potentially boost sales in the premium car segment, which has faced challenges in recent times due to economic factors and high taxation.

As the automotive industry adapts to these tax changes, it remains to be seen how other manufacturers, especially in the luxury segment, will respond to the new GST structure and whether this will lead to a significant shift in consumer buying patterns in the Indian automotive market.