Under the GST framework hybrid cars will be slapped with 43% total tax amount leading to significant price hike
India is all set to adopt a whole new tax system christened as the Goods and Services Tax or GST, where all the state and central government taxes are combined and it would make the system much easier. Also, this is going to be the biggest tax reform after independence. Now, with the GST scheduled to roll out from 1st July, Indian auto industry is also gearing up to adopt the new system and under this, the environment friendly hybrid cars will be much costlier than now. This means models like Maruti Suzuki Ciaz SHVS and Ertiga SHVS will be much pricier.
Under this new tax system, the hybrid cars will be slapped with 43% of total tax amount due to their positioning at the highest GST slab of 28% and additional cess over and above that. With this, the drive towards introducing environment friendly powertrain technology in the country is expected to face a major setback.
Maruti Suzuki currently sells two of its popular models Ciaz midsize sedan and Ertiga MPV with diesel SHVS technology. Both the cars will be priced much higher compared to their current pricing, as GST rolls out. Both the SHVS variants of these two models will see price hike by around Rs. 1 lakh – Rs. 1.50 lakh.
Interestingly, Indian government used to offer subsidy for the hybrid models under its FAME scheme. The Ciaz SHVS and Ertiga SHVS too were receiving the benefit, but as the government has stopped offering this subsidy, buyers will definitely see a hole burnt in their pockets if they opt for buying a hybrid model.
While automakers like Maruti Suzuki, Toyota and Mahindra have already expressed their concern regarding the adverse impact of this high rate of tax on the hybrid cars, the GST Council has made sure that tax rate will be unchanged. This seems pretty much contrasting as the government is making plan to introduce zero emission mobility in the country by 2032. On the other hand it is making things harder for the buyers who are opting towards buying lesser emission eco-friendly cars.
Maruti Suzuki Ciaz SHVS Gallery