GST reforms: New regime, but old problems persist for car dealers

With new GST rates kicking in, auto dealers face uncertainty on recovering compensation cess from unsold stock, even as OEMs cut prices to spur festive demand

As the new rates of goods and services tax (GST) become effective on Monday, car dealers are sitting on estimated inventories of 500,000 units, for which claiming the balance of the compensation cess is unclear.  At the beginning of September, dealers had an unsold stock of around 600,000 and around ₹4,000 crore of compensation cess paid on these vehicles. 

According to dealer sources, this has come down to 500,000. While the cess balance has not been accounted for, according to rough calculations the vehicles sold would roughly account for ₹500 crore-800 crore worth of that. This