KATHMANDU: Automobile prices in India will come down significantly once the Goods and Services Tax (GST) 2.0 kicks in on September 22.
India currently levies GST and compensation cess on automobiles. Starting September 22, India will scrap the compensation cess and retain only the GST. This tax reform is projected to significantly lower vehicle prices, while also increasing demand for motor vehicles.
Under the new tax system, small cars are expected to become 10–12% cheaper, while SUVs and MPVs could see an 8% price cut.
Previously, sub-four-meter cars with petrol engines below 1,200cc or diesel engines below 15,00cc faced a combined tax rate of 29–31% (GST plus cess). From September 22, they will be subject to only 18% GST. Similarly, SUVs and MPVs that were taxed at 43–50% will now face a flat 40% GST. Likewise, two-wheelers up to 350cc will be subject to only 18% tax. As a result, motorcycle prices are expected to drop by as much as 20,000 Indian rupees (INR).
The price reduction in India by an average of 10% is also expected to benefit the Nepali market which imports most of its ICE cars from its southern neighbors.
Automakers Slash Prices
Major automobile brands have already announced price cuts in line with the new tax regime.
Hyundai has lowered prices by as much as INR 240,000 — INR 74,000 Indian on the Grand i10 Nios, INR 78,500 on the Aura, INR 123,000 on the Venue, INR 72,000 on the Creta and INR 60,000 on the Creta N Line.
Similarly, Maruti Suzuki has reduced prices by as much as INR 110,000. Models like Alto, Wagon R, Celerio and Baleno have all seen price cuts.
Mahindra has reduced prices by up to INR 156,000 on its SUVs, including Bolero Neo, Thar, Scorpio N and XUV700.
Tata Motors has brought down prices by up to INR 145,000. According to the company, the price of Tiago has come down by INR 75,000, Tigor by INR 80,000, Altroz by INR 110,000, Punch by INR 85,000, Nexon by INR 155,000, and Harrier by INR 140,000.
Japanese brand Toyota has lowered its prices by up to INR 350,000, depending on models.
Likewise, Kia has reduced the price of the Sonet by INR 164,000, the Seltos by INR 75,000 and the Carnival MPV by INR 450,000.
Volkswagen and Skoda have reduced prices by up to INR 325,000 and INR 580,000, respectively, while Renault has lowered prices by up to INR 96,000 and MG by up to INR 300,000.
Among luxury brands, Mercedes-Benz has cut prices by up to INR 1.1 million and BMW by up to INR 890,000. Audi, Lexus and Land Rover have also lowered prices by up to INR 1.1 million.
Impact on Nepal
The price reduction in India by an average of 10% is also expected to benefit the Nepali market, which imports most of its ICE cars from its southern neighbors. However, given Nepal’s high tax structure, the price drop will not be proportional to that in India.
