Buses will draw a 15% cess over and above the 28% GST leading the total tax incidence to 43%
As India has adopted the new tax system called Goods and Services Tax or GST, the transport buses are about to become pricier compared to the pre-GST period. The buses will draw a 15% cess over and above the 28% GST that will lead the total tax incidence to 43%. This means buses will be positioned in the same slab as the hybrid and luxury vehicles.
As per Finance Ministry’s notification, vehicles carrying ten or more persons including the driver will be slapped with 15% cess over and above the 28% GST. This means the pricing of transport buses will go much higher compared to their previous pricing as during pre-GST period they were taxed at 27.8% rate. A 15.2% increase in total tax amount could impact the bus sales heavily.
Not only the CV business, it would also impact the public transportation at large as well. Interestingly, Indian government has been advocating to increase the number of public transportation in order to curb the rising pollution. Also, a large number of people in the cities commute via buses every day. With the bus industry hit by such high rate of tax there could be adverse effect as well.
SIAM says the government is showing contradictory move towards its own drive to increase and improve the public transport system. In India major automakers like Tata Motors, Ashok Leyland are the strong players in the bus sector and these companies believe the GST rate for buses will impact all the operators as well as the end users also.
Interestingly, government of India’s new tax system seems to be contradicting its own policies. For instance, the 43% total tax amount under GST will surely affect the sales of hybrid cars. As the government has expressed its ambitious goal towards lesser emission and zero emission mobility to be introduced in the country in near future, taxing the lesser emission hybrid cars will surely affect its own stand.