The revised prices could be out by Diwali this year if the new rules are implemented swiftly
The government of India is planning a thorough GST reform to ease the burden on Indian consumers and boost the demand for goods and services. In a bid to achieve that, Prime Minister Narendra Modi announced this plan during his speech at India’s 79th Independence Day celebrations. Among many other pertinent commodities and services, the mass market vehicles, including cars and two-wheelers, could get cheaper due to the reduction of GST. Here are the details.
Passenger Cars and Two-Wheelers Could Get More Affordable Due To Latest GST Reform
According to the latest news reports, the government is planning to restructure the GST implementation by reclassifying it into two broad categories – Standard and Merit. Until now, the goods and services were divided into 4 slabs with 5, 12, 18 and 28 per cent tax brackets. The two new sections will attract 5 and 18 per cent taxes. Currently, cars and two-wheelers fall under the 28 per cent purview. Lowering this to 18 per cent could mark a significant reduction in the prices of these vehicles.
As an extension to this aspect, the GST reforms will even lead to the reduction of prices of the spare parts of the vehicles. Therefore, even the maintenance and service costs could become more attractive. In essence, the running costs of mass market cars and two-wheelers could also become more affordable. The government is planning the swift implementation of these reforms. The Finance Ministry said that the GST Council is expected to discuss the recommendations in the upcoming meeting. This means that we could expect lower prices by Diwali this season.
My View
I must admit this could be a huge step to boost sales and demand not just in the automobile industry, but the overall economy in general. This is particularly relevant since the tariffs by Donald Trump have unsettled the Indian market a bit. This GST revamp will help ease of doing business and boost trade for the MSME sector. This will, in turn, ensure that all sorts of goods and services will become more accessible to the masses. Let us see how things pan out in the coming weeks.
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