Dealers say enquiries are healthy, but a lot of bookings aren’t converting to deliveries as buyers prefer to wait for clarity.
Why buyers are waiting
The Union Finance Ministry has proposed a simpler GST structure with two slabs. If the GST Council approves changes that reduce the tax rate on vehicles,
on-road prices could ease. At present, most cars attract 28% GST, and many also carry a compensation cess (varying by vehicle type).
A lower GST rate, if adopted, would trim the tax component and could improve affordability.
What could change for car prices
For small petrol cars today, the effective tax includes 28% GST plus a small cess; for bigger vehicles like SUVs, the combined levy can be much higher.
If the GST rate on vehicles is cut, the base tax would fall, and manufacturers may pass on part or all of the benefit to consumers.
The exact price drop would depend on the final Council decision, the treatment of compensation cess by category, and each company’s pricing strategy.
Simple Example: Price Impact of GST Cut
| Car Model (Example) | Ex-Showroom Price (Before Tax) | Current Price (28% GST) | Expected Price (18% GST) | Possible Savings |
|---|---|---|---|---|
| Small Car | Rs. 7,00,000 | Rs. 8,96,000 | Rs. 8,26,000 | ~Rs. 70,000 |
| SUV | Rs. 15,00,000 | Rs. 19,20,000 | Rs. 17,70,000 | ~Rs. 1,50,000 |
This example shows how buyers could save significantly if the GST rate is reduced from 28% to 18%.
However, the final benefit will also depend on how the cess is applied and how manufacturers adjust prices.
Festive season worries for dealers
Dealers say the timing is hurting sales: even customers who paid a booking amount are delaying delivery, hoping to save more if rates change.
With the festive season underway, showrooms fear inventories could pile up and monthly targets may be missed if the decision is delayed.
Industry’s appeal to the Centre
Automakers and dealer associations are urging the Centre to provide clarity and, if approved, implement new rates quickly.
A faster decision would help customers plan purchases and allow the industry to manage production and stock more efficiently.
What should buyers do now?
If your purchase is not urgent, you may choose to wait for the official announcement on GST rates.
If you need a vehicle immediately, ask your dealer about ongoing festive discounts, exchange bonuses, and whether a
“price-protection” clause is available to safeguard you in case of a near-term price revision.
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