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All cars placed under the highest tax slab, to be charged 28% GST

Snapshot: Currently, small cars, which are under 4-metres in length, are charged at around 30 per cent. Hence, the automobile makers were hoping that auto GST will fall under the 18 per cent mark after the revision. But, on the contrary, upon implementation of this new revised structure, they will be charged more or less the same.

The GST (Goods and Service Tax) department has revised the tax structure and have presented a four-tier tax structure at 5%, 12%, 18% and 28%. Essential good are to be charged the least and luxury items, including cars, will attract the highest 28 per cent. Going by the structure, whenever the new GST is implied, all cars will fall under the same 28 per cent mark. So, everyone who might be waiting in anticipation for automobile prices to be slashed in April, 2017, take a deep breath, the prices are going to be more or less the same.

Having said that, when the Finance Minister, Arun Jaitley, was asked about the revised taxation structure for automobiles, he said that all cars will be charged with equal amount of tax. However, there is a difference between cars and luxury cars. So even though luxury cars will be charged the same 28 percent, their owners will have to pay a little extra, since they can afford it.

Currently, small cars, which are under 4-metres in length, are charged at around 30 per cent. Hence, the automobile makers were hoping that auto GST will fall under the 18 per cent mark after the revision. But, on the contrary, upon implementation of this new revised structure, they will be charged more or less the same.

However, the council is yet to mention the definition of luxury cars. They have not even quantified or defined the additional cess and additional charges that the luxury car buyers are going to be burdened with. But, there has been slight indications that the Government will be persisting with the current cesses and also include some special taxes as well.

Further, having hinted at this, the finance department promised that the gross total tax will not exceed 40 per cent, lest its might turn out too harsh for the luxury auto buyers.

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