As September 22 approaches, the headache of banks increases! As GST changes approach, there is a rush to cancel car loans.
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GST on cars is going to be reduced from September 22, due to which their prices will reduce. For this reason, many customers are now canceling their sanctioned car loans.
There is a race among banks to cancel car loans.(Image:AI) New Delhi. Banks in Delhi and other cities are suddenly receiving a large number of requests to cancel car loans. The reason is the GST reform to be implemented from September 22, after which the prices of vehicles will decrease. In the recently held 56th GST Council meeting, it was decided to reduce the GST rate on vehicles with small engines (up to 1,200 cc) from 28 percent to 18 percent. The effect of this is that those who had already got the loan approved to buy a car, are now waiting to get the car at the new rates after September 22.
Benefit for customers, difficulty for banks
An official of a public sector bank said that many customers are ready to pay the cancellation charge, because they will save more by buying the car at the new rates. Banks are already trying to attract customers by waiving off processing charges on home and vehicle loans, but the sudden GST cut has forced customers to wait.
When will you get the benefit of new GST rate?
According to CBIC officials, if the car dealer has issued the invoice, then only the old rates will be applicable. But if the invoice has not been made yet, then customers can take advantage of the reduced tax from September 22. This is the reason why there is a slowdown in the sales of vehicles at present. Due to Shraddha Paksha, customers are postponing purchases. Many people are now considering getting a better version instead of the original model, because they can get a benefit of up to 10 percent from the new rates.
Impact on auto companies and new tax structure
Compensation cess will also be abolished from September 22, due to which cess worth about ₹ 2,500 crore will remain stuck in the books of auto companies. Currently, the total tax incidence on cars ranges from 29% to 50%, depending on engine capacity and length. But after the new rates, only 18% GST will be charged on petrol vehicles up to 1,200 cc and diesel vehicles up to 1,500 cc. GST will continue up to 40% on big engines and SUVs. Small and mid-range car buyers will benefit the most from this.
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