Buying a car? Here’s how GST will affect prices

Under the government’s new GST, cars are split into four main vehicle categories - small cars, large cars, electric vehicles and hybrids. Most automobiles face a standard 28 percent tax rate, with the provision of an additional variable cess on any category.

Across the board, there’s a reduction in taxes, with the drop ranging from 2.25 to 12 percent, depending on the category. Hybrid cars have been kept in the highest rate bracket - 28 percent with an additional 15 percent cess, taking the total to 43 percent. They carry the same amount of tax as a large car. The government’s push towards electric vehicles will continue and electric cars come with a tax burden of 12 percent, which is 16 percent lower than any other category.

There is no certainty yet whether car manufacturers will pass on the entire benefit of lower taxes to customers. Toyota’s Fortuner sees a 12 percent drop in total taxation, but the carmaker is expected to drop prices by only about 7 percent. Pre-GST taxation for SUVs consists of two separate duties based on ground clearance.