The central government has made major changes in GST. Now there will be two slabs of 5 and 18%. There will be a special slab of 40 per cent. Tobacco products and luxury goods have been kept in it. Before Diwali, the central government has given a big gift to the people. Reforms in GST will impact everything from essential commodities to the automobile sector. There will be a reduction in car prices across the country. Let us know how much the car prices will be affected after the GST reforms.
The central government has reduced the GST rate on small cars. Currently, 28 percent GST was applicable on cars with 1200 cc petrol and 1500 cc diesel engines. But with the new change, now 1200 cc petrol and 1500 cc diesel engine cars will attract 18% GST. Meaning a reduction of 10%. But the condition is that the length of the vehicle should not exceed 4 meters. On buying an electric car, there will be only 5% tax instead of 12%. Hybrid and hydrogen powered cars have been brought under the ambit of 18% GST. Earlier, 28 percent tax was levied on these cars.
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Understand mathematics with examples
Suppose you want to buy a 1200 cc petrol car. Its length does not exceed four meters. The base price of the car is Rs 10 lakh. According to the current GST system, it will be taxed at 28%. That means Rs 2.80 lakh will have to be paid as GST. In this context, the price of the car will become Rs 12.80 lakh. Now let us understand the entire mathematics based on the new GST slab. Suppose now if you buy the same car after September 22, it will be taxed at 18% instead of 28%. This means that now instead of Rs 2.80 lakh, you will have to pay Rs 1.80 lakh as tax. The price of the car will now be Rs 11.80 lakh. In this way you will get a direct benefit of one lakh rupees.
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Middle class families will get benefits
Changes in GST will benefit middle class families. After September 22, prices of compact sedans and hatchbacks will come down. With the savings, people can upgrade their car model. Apart from cars, the central government has also imposed 18% GST on three-wheelers instead of 28%. Apart from this, 18 percent GST will be applicable on all auto parts. This means that not only buying the car, but getting it repaired will also be cheaper. Bikes smaller than 350 cc will also come under the 18% limit.
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