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Effect of gst rate on indian automobile sector

pronod (Research Head) (29 Points)

20 December 2016

GST Rates – Impact on Automobile Sector

Highlight

Overall positive impact on automobile sector
Mid-range car, tractors, two-wheeler, auto-ancillary and battery manufacturers to benefit more
Commercial vehicles and luxury car manufacturers will hurt
Manufacturing facility to speed up and reduction in cost of operation will help rise in profit margin

Details Article - https://goo.gl/VkmswF

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2 Replies

Nitin Bhuta (Chartered Accountants) (1253 Points)
Replied 20 December 2016

Due to reduction in levy of overall taxes , it is anticipated that price of automobiles should be reduced but I doubt practically whether any benefits would be passed on any ultimate consumer by the manufacturers in general.

Madhukar N Hiregange (Chartered Accountant) (38934 Points)
Replied 22 December 2016

If and when GST comes- all manufacturers would reduce the prices by around 5% from the prices pre gst on cars manufactured after GST. This is for the reason that they are seeking price reduction from all the A category vendors to reduce the price appropriately so they would not loose too much. It shouldbe remebered that CAR cos do not make much much by sale of cars but more from spares sales.

Further under the GST law there is a provision of anti profiteering where the benefit of lower taxes needs tobe passed on and demonstared. Tax compliant comanies would not like to get inot disputes.