Consumers Voice Frustration Over High GST and Additional Charges on Cars in India

Indian consumers are increasingly voicing their discontent over the soaring costs of purchasing cars, citing high Goods and Services Tax (GST) rates and additional charges as major pain points. With the automotive industry struggling to regain its pre-pandemic momentum, buyers are feeling the pinch of inflated prices, making car ownership an increasingly distant dream for many.

The GST Burden

Currently, cars in India attract a GST rate of 28%, one of the highest tax slabs under the GST regime. Additionally, depending on the type of vehicle, consumers are required to pay cess ranging from 1% to 22%. For instance, luxury cars and SUVs, which are already expensive, face the highest cess, pushing their prices even further out of reach for the average buyer.

"Buying a car in India has become a luxury, not a necessity," said Ramesh Kumar, a Delhi-based professional who has been postponing his car purchase for over a year. "The high GST, along with other taxes and charges, makes it almost impossible for middle-class families to afford a decent vehicle."

Hidden Costs and Additional Charges

Apart from the GST, consumers are also grappling with a slew of additional charges, including road tax, registration fees and insurance costs, which vary from state to state. These charges can add up to 10-15% of the car's ex-showroom price, further burdening buyers.

For example, in states like Maharashtra and Karnataka, road tax can be as high as 13-15%, while insurance costs have also seen a steady rise due to increasing vehicle prices and mandatory third-party insurance norms. "The on-road price of a car is significantly higher than the ex-showroom price, and these hidden costs are rarely explained transparently by dealers," said Priya Sharma, a Mumbai-based homemaker who recently purchased a hatchback.

Impact on Demand

The high cost of ownership has started to reflect in the slowing demand for cars in India. According to recent data from the Society of Indian Automobile Manufacturers (SIAM), passenger vehicle sales have shown only marginal growth despite the festive season, traditionally a peak period for car purchases.

Industry experts argue that the high GST rates are counterproductive, as they discourage buyers and stifle demand. "The government needs to reconsider the tax structure for the automotive sector. Lowering GST rates, especially for smaller and more affordable cars, could boost sales and support the industry's recovery," said auto analyst Rajesh Menon.

Consumers Demand Relief

Frustrated consumers are now calling for government intervention to reduce the tax burden on cars. Many have taken to social media platforms to express their grievances, using hashtags like #ReduceGSTOnCars and #AffordableCarsForIndia to amplify their voices.

"The government talks about promoting 'Make in India' and boosting the economy, but how can they expect people to buy cars when the taxes are so high?" questioned Anil Mehta, a small business owner from Gujarat. "We need relief, not just for consumers but for the entire automotive ecosystem."

The Way Forward

While the government has previously hinted at revisiting GST rates for the automotive sector, no concrete steps have been taken so far. With the upcoming Union Budget in February 2024, consumers and industry stakeholders are hopeful for a reduction in GST rates and a more balanced tax structure.

Until then, the dream of owning a car remains elusive for many Indians, as they continue to bear the brunt of high taxes and additional charges. As the debate over affordability and taxation intensifies, one thing is clear: the need for a consumer-friendly policy has never been more urgent.