HSBC Report: GST Cut Could Make Small Cars 8% Cheaper

Swift Summary

• HSBC reported that reducing GST on small cars in india from 28% to 18% could lower their prices by approximately 8%.
• Passenger vehicles currently attract GST rates ranging from 29%-50%, with a cess added to the standard 28%.
• Under the proposed change, larger cars could have a “special rate” of 40% (without cess), resulting in price reductions of around 3%-5%.
• Domestic two-wheeler manufacturers woudl benefit significantly from the GST reduction, especially compared to international counterparts.
• The government may face an impact of USD 4-5 billion if this scenario materializes; an alternative flat reduction option across all car categories might entail a higher revenue loss of USD 5-6 billion.

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Big GST cut may rev up demand for small cars

Indian Opinion Analysis

The proposed GST reductions, if implemented, could offer immediate affordability for smaller cars and motorbikes in India-perhaps revitalizing consumer demand. This aligns closely with ongoing governmental goals to promote manufacturing and increase vehicle penetration across various demographics. Though, balancing economic benefits with fiscal responsibility is key in this very way tax revisions would likely create substantial revenue shortfalls estimated between USD $4-6 billion.

While larger car models see comparatively lesser price adjustments under this framework, focusing more significantly on smaller vehicles suggests attention toward promoting middle-class access while continuing India’s EV-focused automotive evolution efforts indirectly via taxation recalibration subtleground cases*np