Maruti to Tata Motors: Auto companies start passing on GST cut to buyers

Automobile firms have started passing on the benefits of the GST rate rationalisation to customers to boost festive buying. Tata Motors announced it will pass on the entire benefit to the buyer, resulting in price reductions of up to ₹1.55 lakh. 

 

Mahindra and Mahindra, too, said it is passing on the entire benefit to buyers. 

 

This comes a day after Maruti Suzuki India Chairman RC Bhargava said the Alto maker would be passing on the benefits to customers. Bhargava had said that small cars could get cheaper by 8.5-9 per cent as a result of GST slab reduction to 18 per cent from 28 per cent (plus cess) earlier. 

 

The Centre has done away with compensation cess on cars.

 

Shailesh Chandra, managing director of Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility, said that the reduction in GST is timely and the firm is passing on the entire benefit of the reduction to the customer, enabling first-time buyers.

 

“With the latest GST reduction, we project that the small car market, which was degrowing, will now grow this year by over 10 per cent,” Bhargava had said on Thursday. “As a result, the overall passenger car market should grow by 6-8 per cent.”

 

Maruti’s Alto could see a price drop by ₹40,000–50,000, while the entry-level Wagon R may see reductions between ₹60,000 and ₹67,000. Company officials are still working out the details.

 

The GST Council on Wednesday cut the tax on small cars (less than 4 metres in length and under 1200 cc engine capacity for petrol and 1500 cc for diesel) to 18 per cent from an earlier 29-31 per cent (including cess). As for larger cars (over 4 meters, over 1500 cc engine, and over 170 mm ground clearance), the tax rates were slashed to 40 per cent from an earlier effective rate of 50 per cent (including cess). Motorcycles with engine capacity less than 350 cc also will be taxed 18 per cent, against a previous levy of 28 per cent.