How GST will Impact the Indian Automobile Industry

GST Impact on Automobile Industry The Automobile Industry, the Implementation of GST would result in manufacturers spending lower taxes and the customers may also be profited. Though, while the bill has been explained in the present session, it has to be okayed by the state assemblies and The GST deadline proposed by the Govt is April 2017. There have been several speculations regarding the impact of the GST on various sectors such as oil and gas sector, Telecom sector.

The Automobile Industry is likely to earn from the new tax reform and the auto companies are requiring growth with the implementation of the GST in India. This will decrease several unnecessary logistics cost, remove trade hurdle and give better interstate sales and delivery.

GST Impact on Automobile Industry Further, with the effective tax rate dropping to around from 27 percent to 18 percent, the demands of the automobiles will get boosted. It is considered that the on-road prices will go lower by 8 percent after the implementation of GST. The automobile creators have raised their views on the GST.

How will the GST profit the Automobile Sector? GST will be a positive effect for the automobile sector primarily because of the efficiency and the removal of cascading that is required with GST. And, to provide you an example, in an automobile sector, a car is manufactured in a particular state and frequently, 80 percent of these cars are sold to states outside the state of manufacturers to dealers outside the state. So, today to accurate away give you an example, the two percent Central Sales Tax (CST) that they pay will not be there tomorrow because surely, origin tax is not there.

How will the GST profit the Automobile Sector? Despite the two percent, CST will be a combined GST (IGST) which will be fully creditable by the dealer when he sells the car in the other state. And even from a appropriation point of way, if there are interstate appropriation we suffer today at 2 percent CST which is a cost to the manufacturer, that also will not happen because those interstate appropriations will have an IGST in it which is again available as a full credit to the manufacturer if the credit rules are easy.

POSITIVE IMPACT ON AUTO SECTOR Vehicle prices -  The excise duty for vehicles is arranged into four slabs, in which the modest tax rate is applicable to small cars. With GST implementation, taxes levied by the centre similar excise duty and state levels taxes like sales tax, road and registration tax would all be subsumed into one. Assuming that the proposed tax rate of 18- 20 percent is accepted, the vehicle prices are expected to decrease. 

POSITIVE IMPACT ON AUTO SECTOR One Market -  The overall compliance burden is required to decrease and bring a higher efficiency in operations. From the Indirect tax perspective, the entire country will be treated as 'One Market' and will add to operational efficiencies.

Overall economic activity is required to raise and we could require a better GDP growth that should push demand for vehicle across categories. The impact of Tax cascading will go away that will decrease the overall cost of vehicle manufacturing. Every taxes on input paid will be offset by the output liability of GST.      Read More @  GST Impact on Automobile Industry