Small cars, some motorcycles to get cheaper after GST rate cut. Check details
In the new GST rates announced by the GST Council today, bikes under 350cc engine capacity and small cars get a tax cut of 10 percentage points.
In the GST rate rejig announced on Wednesday, bikes under 350cc engine capacity and small cars get a tax cut of 10 percentage points. They now go down into the 18% bracket as the 28% slab stands abolished.
The motorcycles, and two-wheelers in general, over 350cc, and the bigger cars will come under the new 40% slab for luxury goods, when this rejig comes into effect on September 22.
All electric vehicles remain in the 5% bracket.
What's a small car?: Cars that have petrol engines up to 1200cc, or diesel up to 1500cc, and length not exceeding 4000 mm, are smaller cars. These cars will now be at 18% GST, down from 28%, which means the Altos and i10s etc will come for less.
Ambulances and three-wheeled vehicles will be in the 18% bracket, down from 28% (the slab that's now abolished).
Also Read | GST rate cut: Individual health, life insurance policies exempt from GST
What about bigger bikes?: Bikes bigger than 350cc engines will now be more expensive, mostly hitting Royals Enfield and other makers who make cruisers and such bikes. Their earlier tax rate was 28%, plus 3-5% cess, taking it to around 32%. Now there's no cess but the flat rate is 40%, meaning more tax.
{{/usCountry}}What about bigger bikes?: Bikes bigger than 350cc engines will now be more expensive, mostly hitting Royals Enfield and other makers who make cruisers and such bikes. Their earlier tax rate was 28%, plus 3-5% cess, taking it to around 32%. Now there's no cess but the flat rate is 40%, meaning more tax.
{{/usCountry}}What about bigger cars?: Cars that do not meet the ‘small car’ definition will be taxed at 40%. That does not necessarily mean more tax of the Thar and Safaris and such SUVs or sedans. The earlier tax rate was 28%, plus there was a cess of up to 22%, thus a total of nearly 50%. That now becomes a flat 40%. That's a benefit for the end user.
{{/usCountry}}What about bigger cars?: Cars that do not meet the ‘small car’ definition will be taxed at 40%. That does not necessarily mean more tax of the Thar and Safaris and such SUVs or sedans. The earlier tax rate was 28%, plus there was a cess of up to 22%, thus a total of nearly 50%. That now becomes a flat 40%. That's a benefit for the end user.
{{/usCountry}}Also read | Full list of items impacted by GST rate rejig
This rejig comes after PM Narendra Modi announced rationalisation of the slabs. There will no longer be the 12% and 28%, slabs, meaning only two of the earlier four slabs will remain: 5% for essentials and 18% for non-essentials. A 40% slab is introduced for “sin goods” such as the bigger bikes, tobacco, and cars costing ₹50 lakh and above, among other items.
