GST rate cut 2025: Car dealers grapple with Rs 2500 crore cess hit
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Some of the major OEMs have said that they would bear the difference in GST. Photograph: (ANI file)
GST rate cut 2025: The central government has reduced the GST on small cars from 28 per cent to 18 per cent. It has placed bigger cars in the 40 per cent tax slab.
Car dealers across the country witnessed a bumper increase in their sales on September 22, as the GST reform implementation coincided with the start of the festive season with Navratri. However, many dealerships are reportedly facing a loss of Rs 2500 crore as they had already paid the cess, which the government eliminated with its GST reforms.
Dealers have written to the original equipment makers (OEMs) to find a way out, an industry source told Business Standard. The industry source said that calculations show that the cess amount has gone void after the GST 2.0 reforms were implemented.
This is around Rs 3-5 crore per dealer. Car dealerships are now waiting for the response from OEMs on how this financial burden could be shared.
OEMs are themselvesseeking clarity before a call can be taken.
The central government has reduced the GST on small cars from 28 per cent to 18 per cent. Bigger cars now attract 40 per cent tax. Earlier, the tax levy was higher because of the cess. The government has eliminated the cess, effectively making even SUVs cheaper.
Some of the major OEMs have said that they would bear the difference in GST, reported BS.
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Car companies and dealers log record sales
Due to the festive season and the GST 2.0 implementation, Maruti Suzuki recorded 80,000 enquiries and delivered 25,000 cars on September22, recording the highest-ever sales figure in a day in 35 years.
A similar trend was also witnessed by Hyundai. 11,000 cars were booked on a single day, its best performance in five years. Tata Motors also recorded 10,000 car deliveries and over 25,000 enquiries on the first day of Navaratri.