• Source:JND
Add as a preferred

GST Rate Rationalisation: The GST Council has approved the Centre's proposal to do away with two slabs of 12 per cent and 28 per cent, bringing major relief for the consumers. The rate rationalisation leaves two slabs of 5 and 18 per cent.

While goods and services under the 12 and 28 per cent slabs will be accommodated in the remaining slabs. Apart from that, a crucial development is the new slab of 40 per cent which will comprise sin and luxurious products.

The luxurious cars will come under this slab and will therefore draw 40 per cent GST as compared to the 28 per cent earlier rate. Despite putting the luxurious cars in the higher tax slab, the cost of these vehicles will be reduced by up to 10 per cent.

How have luxury vehicles been taxed so far?

At present, the petrol, CNG, LPG, and Hybrid personal vehicles with an engine capacity above 1,200 cc or the Diesel vehicles with the engine capacity of above 1,500 cc, were taxed at 28 per cent.

ALSO READ: GST 2.0: Air Travel To Get More Affordable With Reduced Tax Rates; Here’s How Much You Can Save?

However, there was an additional compensation cess of 17 to 22 per cent on these vehicles which would take the total tax to 45-50 per cent.

What will change now?

Under the new slab, the 40 per cent fix GST will be levied on all such vehicles without any additional cess. This would ultimately save 5 to 10 per cent in customers' pockets while purchasing such vehicles.

Will other cars also become cheaper?

The rate rationalisation has also reduced the cost of other vehicles as they have been placed under an 18 per cent slab against an earlier 28 per cent. These categories of vehicles have been placed under 18 per cent GST slab from 28 per cent:

-Petrol, Petrol-Hybrid, LPG, CNG Cars (Below 1,200 cc)

-Diesel and Diesel Hybrid cars (Below 1,500 cc)

-Three-wheeled vehicles

ALSO READ: GST Reforms: Maruti Cars To Get Cheaper, Here’s How Much You Can Save

-Bikes (Below 350 cc)

-Transportation Vehicles Like Trucks