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Carmakers Cut Prices as India Debuts National Sales Tax
Maruti Suzuki Ltd., India’s largest carmaker, has become the first carmaker to lower prices as the country launches a new nationwide goods and services tax.
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Maruti Suzuki Ltd., India’s largest carmaker, has become the first carmaker to lower prices as the country launches a new nationwide goods and services tax.
The GST, which began on Sunday, is the country’s most sweeping tax reform in 70 years. It replaces multiple taxes and state-level variations with one of four fixed rates (5%, 12%, 18% and 28%), depending on the type of product or service.
Cars will be taxed at a base 28%, which is 2%-9% lower than the previous combined levies for most models. But some types of vehicles, such as hybrid cars and small-capacity buses, will become more expensive under the new tax scheme. Variations in local taxes and registration fees will remain, thereby causing differences in net car prices across the country.
Government analysts expect the GST will slow economic growth temporarily but soon generate a 2-point gain in economic growth. To spur sales in the meantime, carmakers are expected to roll out price hikes of as much as 13%. Maruti Suzuki Ltd. led the group on Saturday with a 3% price cut.
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