Influence of GST on Cars and Two Wheelers
In this article, Aklovya Panwar discusses the influence of GST on the sale and purchase of cars and two wheelers.
Introduction to GST
On July 1, 2017, the historical tax regime of India has passed after twenty seven years of effort. This date plays the most significant role for Indian economy as we are shifting from a continuously followed rigid system of indirect taxation to one tax system i.e., Goods and services tax (GST).
The main efforts for GST has been commenced in the year two thousand six when the UPA government announced the introduction of GST upto two thousand ten but the fresh tax regime remained a fantasy. Then in 2011, the 115th constitutional amendment bill was introduced in the Lok sabha for the imposition of GST but the bill was passed in two thousand fourteen in Lok sabha as the 122nd constitution bill.After the wait of two years, the bill got assent from the Rajya sabha aswell and has been passed in 2016. [1]
The GST regime is based on the principle of Consumption and destination principle. It applies to all supplies of goods / services (as against manufacture, sale or provision of service) made for a consideration except –
- Exempted goods / services from the mutual list of CGST and SGST
- Goods / services which are out of the scope of GST
- Exchanges which are below from the already set threshold boundaries under GST. [Two]
In this GST regime there is a benefit to the producer/retailer, if they have already paid the GST then it can be set forward against that payable on the supply of goods and services or they can claim it back through tax credit mechanism. [Three]
The reason why GST has to introduce is because Indirect Tax system is very intricated in India because there are various types of taxes that are charged by the Central and State Governments on Goods and Services. These taxes incorporate Entertainment Tax for watching film, Value Added Tax (VAT) for acquiring goods and services by the purchaser. Different taxes are excise duties, Import Duties, Luxury Tax, Central Sales Tax, Entry tax, and Service Tax. [Four] Businessmen have to maintain accounts which need to obey with all the applicable laws.
Now GST comes as a ray of hope because it seems to be a promising proposal.
Benefits
GST regime is an optimistic treatment for the consumers and the sellers because it seems capable of reducing the market prices of the goods. Five] This will solve the elaborate and numerous taxation systems which somehow lead to the waning of “Black money” and permit Free Flow of Goods and Services [6]
Influence of the news GST regime over buying and selling of vehicles
The Goods and Service Tax bill proposed for the abstraction of tax has been in talks for a significant time now. Four of these GST sections which incorporate the “Integrated GST Bill 2017, The GST (Compensation to States) Bill 2017, the Central GST Bill two thousand seventeen and the Union Territory GST Bill 2017” have been passed by the Rajya Sabha. There is no direct influence on the purchase and sell of cars and bikes.But the outcome seems to be favorable as there will be a single tax imposition instead of numerous taxes which will surely enhance clarity.
Goods and Services Tax impacts are yet indeterminate to numerous and different sectors are yet indistinct in the matter of how this will affect their business, sales and profits.The automotive area has likewise been in a predicament bondage about the impacts of Goods and Services Tax (GST) and its effect on two and three wheelers, passenger and business vehicles. Prior automakers crosswise over India reported pre–GST rebates to clear stocks and begin once more from very first July 2017.
This made some turmoil in the brains of purchasers in the matter of whether to buy vehicles pre-GST or sit taut for its execution and very likely take advantage of lower prices. It is evaluated that little vehicle are not going to encounter a sensational switch in cost yet luxury vehicles could get less expensive.
Two Wheelers
After the implementation of GST, pre-showroom prices of two wheelers will be same in India with a plane of 28% GST.
Two wheelers have been distributed into two groups under GST rate – engine capacity.
Ex-showroom prices of bikes less than 350cc are set to decrease while those above 350cc will see an increase in prices.
The table will showcase the influence of GST on two wheelers in detail. [7]