A four-tire taxation system has been adopted by the GST panelists for the goods and services in the country. Fixing the tax slabs at 5%,12%,18% & 28%.
All the automobiles in the countery will come under the 28% tax slab.Talking about the luxury vehicles,these will fall in the highest tax slab and will attract an additional cess in the name of green tax.The highest rater for luxury items currently taxed is at 30-31 percent (exercise duty plus VAT).
Considering the existing tax structure, small cars attract an approximate taxation of 28 per cent on an average across the country and hence the overall prices might not change.
What holds us is the fact that the government is yet to define the exact definition and specs of the luxury car segment. Also, any additional cess so collected will be used to compensate the states for any losses of revenue for the first five years of the implementation of GST.
The Society of Indian Automobile Manufacturers (SIAM) had recently recommended a standardized tax system for the small and utility vehicles. It also talked about an additional 8 percent for the other cars.It also suggested that for electric, hybrid and other alternative fuel vehicles, the rate should be at least 8 percent less than the standard rate.
The Indian auto industry has four different slabs of excise duty based on dimensions and engine capacity ranging from 12.5 percent for small cars, CVs, two- and three-wheelers to 30 percent for luxury cars and SUVs. In addition, the government imposed an infrastructure cess ranging from 1-4 percent.
