Update: The GST Council has received prime minister's approval to increase the additional cess on luxury cars by 10 per cent. Cars that are longer than four metres and carry an engine bigger than 1.5-litre will pay a 25 per cent of cess on top of the 28 per cent GST slab. If a vehicle meets only one of the two criteria, then it'll fall under the mid-size category and pay 15 per cent cess in addition to 28 per cent GST. Smaller cars will continue to pay 1 per cent and 3 per cent of extra cess for petrol and diesel engines, respectively. There is no change in tax structure for hybrid cars, which became significantly costlier post-GST.

What is GST?

GST, short for Goods and Service Tax, is the government's way of implementing a simplified tax structure. Before today, thanks to the way the centre and state governments collected taxes, goods would be subject to paying 'tax upon tax', which caused a significant rise in the product cost for the end consumer.

The GST Council has decided to do away with multiple (and utterly confusing) taxes and set four tax slabs instead at 5, 12, 18 and 28 per cent.



What are cars taxed at?

Passenger vehicles fall under the highest tax slab, at 28 per cent. Further, based on body style, an additional cess has been levied, taking the total tax a notch higher.

Here's the full breakdown of pre- and post-GST taxes.

Category Length Engine Pre-GST Tax Post-GST Tax Difference Small Cars Under 4-metres Less than 1.2-litre (petrol) 31.50% 29% 2.50%



Less than 1.5-litre (diesel) 33.25% 31% 2.25%











Mid-Size Cars Over 4-metres Not more than 1.5-litre 44.50% 43% 1.50%











Luxury Cars Over 4-metres More than 1.5-litre 51.60% 43% 8.60%











SUVs Over 4-metres More than 1.5-litre 55% 43% 12%

Ground Clearance more than 170mm



















Hybrid Cars



30.30% 43% 12.70%











Electric Cars



20.50% 12% 8.50%

Note: For pre-GST, we’ve used Mumbai taxes for calculations.



The GST rates effectively narrow the gap between the prices of small and big cars. This could result in a price rejig, especially in the Rs 7-12 lakh price bracket where 'small' and 'big' cars co-exist. To give an example, a Honda WR-V buyer who could also be eyeing the Hyundai Creta will now be able to afford the latter thanks to the narrower price gap between the two.



Here’s a look at how prices of a few popular models have been affected across segments:

Small Cars

Petrol

Small petrol cars attract a total levy of 29 per cent, that comprises of a 28 per cent GST and 1 per cent cess. Save for a handful of exceptions, every sub-10 lakh rupee hatchback and sub 4-metre sedan falls under this categor

Example

Hatchbacks: Renault Kwid, Maruti WagonR, Maruti Baleno, Hyundai Elite i20

Compact Sedans: Maruti Swift Dzire, Ford Aspire, Volkswagen Ameo, Honda Amaze

Crossover/Sub 4-m SUV: Honda WR-V, Ford EcoSport EcoBoost, i20 Active

Maruti Suzuki Alto 800

Pre-GST Price (ex-showroom) Post-GST Price (ex-showroom) Difference Mumbai Rs 2.74 lakh Rs 2.61 lakh ~ Rs 13,000 Delhi Rs 2.5 lakh Rs 2.49 lakh ~ Rs 1,000

Diesel

Small diesel cars attract a total levy of 31 per cent, that comprises of a 28 per cent GST and 3 per cent cess. Every sub 10 lakh rupee hatchback, sub 4-metre sedan and SUV falls under this category.



Examples:

Hatchbacks: Hyundai Grand i10, Nissan Micra, Volkswagen Polo, Maruti Swift

Compact Sedans: Maruti Swift Dzire, Ford Aspire, Volkswagen Ameo, Honda Amaze

Crossover/Sub 4-m SUV: Maruti Vitara Brezza, Ford EcoSport, Honda WR-V, Hyundai i20 Active

Maruti Suzuki Brezza

Pre-GST Price (ex-showroom) Post-GST Price (ex-showroom) Difference Mumbai Rs 7.72 lakh Rs 7.30 lakh ~ Rs 42,000 Delhi Rs 7.26 lakh Rs 7.23 lakh ~ Rs 3,000

Mid-size Cars

Mid-sized petrol and diesel cars attract a total levy of 43 per cent, which comprises of a 28 per cent GST and 15 per cent cess. All C-segment sedans such as the Maruti Suzuki Ciaz, Volkswagen Vento, Skoda Rapid, Honda City and the Hyundai Verna (except the 1.6) fall into this slab.

Maruti Suzuki Ciaz

Pre-GST Price (ex-showroom) Post-GST Price (ex-showroom) Difference Mumbai Rs 8.31 lakh Rs 7.83 lakh ~ Rs 48,000 Delhi Rs 7.72 lakh Rs 7.65 lakh ~ Rs 7,000

Luxury Cars

Taxes on luxury cars have dropped by a substantial 8.60 per cent. Cars from foreign brands such as Audi, BMW, Mercedes-Benz, Jaguar, Volvo and Lexus fall under this category.

Jaguar XE

Pre-GST Price (ex-showroom) Post-GST Price (ex-showroom) Difference Mumbai Rs 39.45 lakh Rs 34.64 lakh ~ Rs 4.81 lakh Delhi Rs 37.25 lakh Rs 34.64 lakh ~ Rs 2.61 lakh

SUV

The big SUVs have the biggest concession, with taxation dropped by 12 per cent. Based on how the body style is defined, there are a plethora of cars that fall under this category.

Examples: Hyundai Creta, Mahindra Scorpio, Mahindra XUV500, Toyota Fortuner, Ford Endeavour

Toyota Fortuner

Pre-GST Price (ex-showroom) Post-GST Price (ex-showroom) Difference Mumbai Rs 27.39 lakh Rs 24.78 lakh ~ Rs 2.61 lakh Delhi Rs 26.66 lakh Rs 24.41 lakh ~ Rs 2.25 lakh

Hybrids

Before GST kicked in, hybrids enjoyed the same taxation as a small hatchback. The government believes hybrids aren’t as kind to the environment as they claim to be, and have chosen to place them in the highest slab instead. The handful of hybrids we have in the country are now taxed at 43 per cent.

Examples: Honda Accord Hybrid, Toyota Camry Hybrid, Lexus ES 300h

Toyota Camry Hybrid

Pre-GST Price (ex-showroom) Post-GST Price (ex-showroom) Difference Mumbai Rs 36.35 lakh Rs 37.94 lakh ~ + Rs 1.59 lakh Delhi Rs 31.98 lakh Rs 37.23 lakh ~ + Rs 5.25 lakh

Electric





In line with the plan of an all-electric India by 2030, electric cars have been given some relief. Taxes are down by 8.5 per cent which should make cars such as the Mahindra E2o Plus and the Mahindra e-Verito even cheaper. Also, this is definitely the step in the right direction for coercing manufacturers to introduce more electric cars.