Impact of GST on Indian Auto Industry

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How GST will Impact the Indian Automobile Industry
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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.

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• 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.

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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.

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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.

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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.

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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. 

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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.

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• 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 _at_  GST Impact on Automobile
  Industry

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