The Goods and Services Tax will be introduced in India on the 1st of July. It is certainly one of the biggest tax reforms the country has ever seen and what it does is simplify the way both consumers and the manufacturers do business while also bringing in equanimity.

There is a lot of confusion right now on how much a variety of things will cost after implementation of GST and automobiles are one of them. Various manufacturers are offering pre-GST discounts but some aren't. This creates confusion for a potential buyer as to which vehicles will get cheaper and which ones won't. 

While the GST proposal seems favorable largely, small cars aren't going to observe much of a change in prices after GST, while luxury cars will get cheaper.

The small car category is for cars that are under 4 metres long with a petrol engine capacity of not greater than 1.2-litre or diesel engine capacity which is not greater than 1.5-litre. These cars at present attract 26-28 per cent tax depending on the state you buy it in. As per the GST rates, the petrol cars will attract an additional cess of 1 per cent while the diesels will be charged an cess of 3 per cent over and above the standard 28 percent.

Luxury cars and medium and full-size SUVs will witness a distinct drop in prices. In fact, manufacturers like Mercedes-Benz, Audi, BMW and Jaguar have previously started passing benefits of GST on to customers. But this drop is applicable only on models that are manufactured in India and not on CBUs.

Sports utility vehicles (SUVs) too will be the clear winners once the new taxation norms are in place. Starting from 1st July, SUVs will draw a fixed 28 per cent in taxation and an addition 15 per cent cess. This brings the total taxes on SUVs to 43 per cent, as opposed to the 48 per cent in the current structure.

Overall, the GST norms can be seen as a positive shift for the auto industry. The current complicated structure was in need a dire update and the fresh norms bring exactly that to the table. While small cars won't be largely affected, the larger respite comes to luxury cars and SUVs that get more affordable in the process.