GST effect: Here’s how the prices of hybrid cars in India could be affected

Hybrids will get more expensive as the all appeals from SIAM and the likes fall on deaf ears

By: | Updated: June 12, 2017 6:03 PM
Toyota Camry Hybrid (Image used for representational purpose only)

 

We’ve been over the subject of the GST a couple of times and yes some cars will get cheaper (that’s including most luxury car marquees) and some cars will get marginally more expensive (the smaller segment, like the Alto and what have you). However, a man named Nitin Gadkari has been in the news lately appealing to the government to reduce the now increased (!) tax on hybrids, electrics, and the semi-hybrids.

Most people who’ve been keeping an eye on the Auto industry and the effects GST will have on it will classify this as a gross oversight on the part of the government. Especially when they have recently released plans of going entirely green by 2030.

Nonetheless, the government has decided to completely rule out their folly with Arun Jaitley hinting at the lack of revision, claiming that the rates are broadly stated and would not be changed just because some people raise an issue. In fact, Mr Jaitley that is exactly how democracy is supposed to work.

In fact, it’s not just frazzled old men who seem to care about the way taxes are levied on hybrids but, SIAM, the Society for Indian Automotive Manufacturers also collaboratively advised the government to adjust the GST slab for hybrids and bring them down to a more rational 18%.

SIAM have also added, understandably, that as a direct result of these taxes. It may be impossible for them to actually ever implement a commercially viable electric two or three wheeler in the future.

Somewhere in the background, a resounding laugh of the fossil lobby ensued.

The existing bracket saw hybrids taxed at 12.5% (within the small car tax bracket) but after a dip in the cess pool of taxes, including a 1 percent National Calamity Contingent Duty, 2 per cent Central Sales Tax and 12.5 per cent VAT bringing the total duties to a tolerable, but still questionable, 30.3%.

With GST, these prices are likely to rise considering that they will be exposed to a 43% tax rate, which means that they will be a whole 13% more expensive.  Translate that, your Toyota Camry Hybrid will now be about 3 lakhs more expensive. While a Honda accord could cost up to 6 lakhs more. Think this makes no sense. Well, go figure. Also, semi-hybrids like the Ciaz Diesel and Scorpio Micro-hybrid have been entirely purged from even the appellate list.

  1. V
    Vivek Gupta
    Jun 13, 2017 at 2:06 pm
    No impact of ITC appears to have been considered. Presently, the credit of Central Excise duty and CST is not available to the dealers. But, entire ITC of IGST shall be available after imposition of GST, which will help to get the final prices to a lower levels. This fact should also be discussed here.
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