Business News | Small Cars May Get Cheaper by 8% if GST Reduced from Current Rate: HSBC Report
Get latest articles and stories on Business at LatestLY. The prices of small cars in India could see a reduction of about 8 per cent if the government decides to bring down the current Goods and Services Tax (GST) rate from 28 per cent to 18 per cent, according to a report by HSBC.
New Delhi [India], August 19 (ANI): The prices of small cars in India could see a reduction of about 8 per cent if the government decides to bring down the current Goods and Services Tax (GST) rate from 28 per cent to 18 per cent, according to a report by HSBC.
The report highlighted that in the present structure, passenger vehicles (PVs) attract GST in the range of 29 per cent to 50 per cent, as a cess is imposed on top of the standard 28 per cent GST rate depending on the size and length of the vehicle.
HSBC noted that under a new regime, the government may consider reducing the tax on smaller cars to 18 per cent from 28 per cent, while for larger cars, a "special rate" of 40 per cent could be introduced with the cess being cancelled.
If this change takes place, smaller cars may see their prices come down by close to 8 per cent, while bigger cars could become cheaper in the range of 3-5 per cent.
The report stated "This would mean for smaller cars prices may come down by 8 per cent and for bigger cars in the range of 3-5 per cent".
The report also mentioned that all two-wheeler makers would benefit from a GST reduction, with domestic players gaining relatively more. However, the government could see an impact of around USD 4-5 billion on GST collections in this scenario.
The report also discussed another, though less likely, scenario of a flat reduction in GST from 28 per cent to 18 per cent across all categories of cars.
In such a case, the cess based on vehicle size would continue, and all cars would see a price benefit of about 6-8 per cent. A flat 10 per cent cut would mean the government absorbs a revenue loss of around USD 5-6 billion. (ANI)
(The above story is verified and authored by ANI staff, ANI is South Asia's leading multimedia news agency with over 100 bureaus in India, South Asia and across the globe. ANI brings the latest news on Politics and Current Affairs in India & around the World, Sports, Health, Fitness, Entertainment, & News. The views appearing in the above post do not reflect the opinions of LatestLY)