Cash discounts on a host of cars are now higher in the countdown to the goods and services tax (GST) with dealers looking to offload as much inventory as possible ahead of July 1. Although input tax credit is available on transition inventory, trade channels are unclear on the processes for claiming these benefits and are liquidating stocks. Discounts on models such as the Tata Zest now range between Rs 70,000 and Rs 75,000 while those for a Maruti Alto, which were running at close to Rs 30,000, are now higher at Rs 35,000-40,000. Dealers for Hyundai have upped cash discounts on the Eon to Rs 35,000-37,000 from Rs 30,000-32,000 at the beginning of the month. The best-selling Grand i10 comes at a discount of between Rs 22,000 and Rs 27,000, and dealers can even be coaxed to part with the premium hatchback Elite i20 at a lower price. The Maruti Swift can now be had at a price that is 25,000 less than at the start of the month while the WagonR is now cheaper by Rs 30,000-32,000.
In addition to the cash discounts, dealers continue to offer other freebies as part of exchange offers and loyalty programmes such as free insurance. However, customers must choose a model from the stock lying with the dealer and the car will be delivered before June 30. “We are giving special GST discounts on Grand i10, Eon and Verna for variants that are available with us and can be delivered in two days,” an executive at a Hyundai dealership in Delhi explained.
After the GST is rolled out, small cars will attract a slightly higher levy of 29% against the current 28% but ideally car prices should not go up since the manufacturer will get the benefit of input tax credit. In the meantime, dealers are clearing out inventory and at the same time they are driving sales. Manufacturers are eligible for full input tax credit on transition inventory, provided excise invoices are furnished. If invoices are not available for the excise paid on inventory lying in warehouses, then deemed credit of 60% (for items taxable at or more than 18% under GST) or of 40% (for items taxed at or less than 18%) will be available. Dealers are also eligible for 100% input credit against excise paid on high-value items that are priced at over Rs 25,000 and which have a serial number, such as automobiles, refrigerators and air conditioners.
Dealers of other carmakers like Ford and Mahindra and Mahindra too are trying to push sales by pricing cars attractively. Discounts on a Mahindra Scorpio have been raised to 35,000-37,000 during the last week from Rs 30,000 at the end of last month. Dealers are also trimming prices for products like the XUV 500, which will become significantly cheaper post-GST.