GST impact: Mercedes-Benz, BMW's made-in-India cars to be cheaper by up to Rs. 7 lakh

Even before the new rates of the federal Goods and Services Tax (GST) on commodities and services came into effect, German luxury carmakers like Mercedes-Benz and BMW have already settled on passing on the benefit of the new federal tax regime to its customers in India, keen to make an early impression on the purchase decisions of auto buyers.

Mercedes-Benz India announced a price revision of its entire range of made-in-India portfolio, which includes nine models like CLA, GLA, C-Class, E-Class, S-Class, GLC, GLE, GLS and Mercedes-Maybach. The prices of the aforementioned models of Mercedes range between Rs. 32 lakh and Rs. 1.87 crore (ex-showroom Delhi). With the benefit of new tax rate under GST, the prices will see a drop by up to Rs. 7 lakh. While the latest price revision will be effective from May 26, throughout June, Mercedes-Benz can revert the prices to the old one if there is a delay in the implementation of the GST. The new tax regime is now proposed to come in effect from July 1, 2017.

"The price revision on a weighted average of 4% will be effective immediately, and is aimed at providing value to a customer's purchase decision before GST implementation," the company said in a statement. 

The reduction of the pricing of the models will vary state wise and range between 2 percent to 9 percent, depending on the current tax structures and local body taxes. BMW India too is following suit although the company is yet to detail the price difference in the current rate of its made-in-India models and its early bird benefits of GST to customers.

Giving thumbs up to the implementation of Goods and Service Tax (GST) in India, BMW Group India has welcomed the decision. "BMW is the fastest to offer preponed GST benefits to our customers much before the roll-out of GST itself," PTI quoted VikramPawah, President of BMW Group India. Carmakers like Audi India, Volkswagen and Jaguar and Land Rover (JLR) are also expected to announce the benefits of GST for its customers in India shortly.

The new tax regime announced by the GST Council proposes 28 percent tax bracket on the SUVs and luxury cars and 15 percent of maximum cess, putting the total tax of the said category in the brackets of 43 percent. Under the new GST, the tax slab for the small cars see a slight raise with 28 percent uniform rate on cars and an additional cess of 1 percent. The current tax systems in place attract a 12.5 percent central excise duty and an additional 14 percent VAT and other taxes in the present tax regime taking the total to 27 percent.

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