Car Prices Could Go Down, Govt Mulls GST Rate Cut

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The Indian government could announce a reduction in GST rates to effectively bring down car prices to lure buyers ahead of the festive season

The government could cut GST tax for cars and bikes in a bid to boost sales as they come under 28 per cent slab. Finance Minister, Nirmala Sitharaman, said it was the Supreme Court’s decision to set the deadline on BSIV vehicles to March 31, 2020. She further stated that the government is in consultation with several sectors and listening to their feedback.

The Union government has also recommended the GST council to cut rates on automobiles. To increase the demand for cars and two-wheelers, necessary action regarding lending schemes and liquidity have also been assessed. Talking about the job losses, she noted that employment in the economic sector largely remains undocumented.

Reflecting the sentiments of Prime Minister Narendra Modi, Sitharaman indicated that the government wants IC engined vehicles and electric mobility-based solutions to co-exist and they would not revel at the expense of each other. We can expect new measures to be implemented and tax relaxations could be guaranteed to revive sales in the automotive sector that have been suffering immensely.

toyota innova touring sport_(new price post gst)

Additionally, it is no secret that two- and four-wheeler manufacturers are banking on the festive season to make a comeback and discounts are in full swing making the buying choices relatively more attractive for customers. At the recent GST council meeting, it was confirmed that the rates for electric vehicles would be reduced from 12 per cent to 5 per cent.

Moreover, the GST rate on electric vehicle chargers had also gone down from 18 per cent to 5 per cent. In the Union Budget 2019, the income tax deduction of Rs. 1.5 lakh was announced on the interest paid on EV loans. The loan should be taken on or before March 31, 2023 and it accounts for the cumulative benefit of Rs. 2.5 lakh over the period of buying the EVs for the taxpayers.


Less than ten days ago, the government also commanded the depreciation cost of automobiles purchased till March 31, 2020 by corporates will be increased to 30 per cent from 15 per cent. There won’t be an increase in registration fee until June 2020 while the government sectors are encouraged to boost the purchase on new vehicles while new measures for scrappage are also considered.