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With the GST looking like a real possibility sooner or later, hopefully it will be implemented in the year 2016, how much impact do you think it will have on the car prices. Eventually, the car companies have to pass on the benefit to the consumer (fully or partially).

Also, once the GST is passed, it is going to take a few months for it to come into effect. So, we might see a time where a lot of people might hold off on their purchases in the anticipation of prices coming down. Sales might tank for a few months. It will be interesting to see how car companies deal with such a situation.

From my (limited) understanding, GST's net taxation on goods and services will be lower than what we are currently suffering.
This means that the prices will definitely come down.

Now regarding the apprehension whether the sellers would pass the tax benefits to the buyers - as far as I know, the automobile sector is highly competitive for the sellers. In high competition among sellers environment the sellers have a very little say over pricing - unless the seller wishes to sit on a stockpile of unsold inventory he will price it based on buyer's pattern.
So the short answer is that the benefits will be passed to the customers in all likelihood.

There is a misconception that GST will lower taxes.. Our indian government will never let go of tax money.. All it will do is rationalize the tax structure so that it is easy to be compliant of all the indirect taxes the govt imposes on businesses and consumers..
In fact, for some goods it may actually increase the taxes as states do not want to let go of revenue that they desperately need for the next set of scams.

How and why are you assuming that prices of commodities will fall with the advent of GST? Yes, the overheads accruing from multi point taxation would reduce, but all other statements and drafts suggests otherwise. The Government claims GST will bring in more revenue by way of bringing more goods and services under its ambit and reducing exemptions and benefits. Then there were reports of Govt. appointed panels suggesting as high as 27% GST! This 27% GST is basically in lieu of Excise Duty (12.5% on most tariff items) and VAT/CST (4-12%). Needless to mention that Excise duty and Service Tax are mutually exclusive, i.e., items attracting Excise duty will not attract Service tax and vice versa. In light of this, I'm of the opinion that prices of commodities might actually increase with the advent of GST.

It will definitely simplify taxes, that's for sure. Only two major tax slabs (Central GST + State GST). GST might also bring down the fluctuation in prices across States.

On paper, it should reduce taxes, but in a country where less than 3% of the population pays income tax, cars will always be regarded as a heavily-taxed luxury item. Quite frankly, considering India's unique situation, I agree that cars should continue to be heavily taxed.

Well the current thing is that we pay ED, CST/VAT, Cess, LBT/Octroi/entry tax that makes the total tax about 27%. If there is a blanket GST rate of 27% it should not change the cost.

In the case of services, the situation is pretty grim. The current service tax is 14%. If this becomes 27%, there is surely going to be an increase in cost of services.

But why? With reduced taxes, total cost of car ownership should come down, and hence make it possible for many to own cars!
For small cars alone, companies pay 12% excise duty, and as car owners we pay the VAT of 12.5% (included in ex-showroom price) and then again 10% of ex-showroom as road tax.
So, about 40% of the manufacturer's price goes to Central & State department agencies as taxes. And this is for just the small cars. For cars > 10L, this figure is as drastic as 65%!! Which means, a car that is priced at 12 lakhs on the road, actually costs less than 7 lakhs without taxes.
i.e. A buyer with 7 lakhs at hand, which can buy a C2 sedan hypothetically without taxes, has to satisfy himself with a B2 hatchback.
With low levels of honesty in many quarters, it is questionable how much of this taxes for the "luxury" goes to the improvement of those who are under-privileged.

There would be simplification of taxation and uniformity in mode of application but not in quantum. Overall this is expected to be revenue neutral. States are expected to get a greater share of the taxes, and have improved collections.

Car prices can be expected to be more or less the same and it definitely is not worth waiting for this to buy a vehicle.

Because GST will broadly subsume only the ED (12.5%) and VAT (12%) while levying an amount at least equal to the sum of the two. Some taxes like Road Tax, etc. will still have to be paid over and above the GST. Therefore, in this scenario, the cost of cars will either remain the same or increase. The cost might only decrease if the rate of GST is lower than the summation of taxes it subsumes, which I highly doubt.

As far as I've studied GST and what my Auditors have told that there will be three type of GSTs.

CGST - Central GST for Interstate Transaction (Input Credit available only if you buy from one state and sell to other state)

LGST - Local GST (for local sales/purchases)

IGST - This is the GST on Import of Services for which no Input Credit will be available.

Hence the GST in India is not like GST System in US or Europe where there is only One Tax i.e. LGST and there is no CGST/IGST.

You can assume it as multiple taxes in a single wrap of box.

AS per the suggestion of Panel on GST, they have suggested three rates of GST i.e. 8%, 20% and 27%.

Most of the items will fall under 20% bracket hence cost of products will go up.

For example, if I buy a Product worth Rs. 100/- from other state and pay GST of 20% then my cost will be Rs. 120/-.

Then sell it to local consumer after adding my margin. In this case cost to local user will be high.

This is my understanding after reading draft GST.

Actually, this GST will cause car prices to go up as they will levy GST on the ex showroom price + we pay registration/road tax on top of it.

As a common man, what I fail to understand is why can't the govt come up with simple and transparent tax laws ?

A slightly OT point, has anyone considered the double taxation while buying cars? The ex showroom amount includes some taxes the manufacturer pays to the govt. but while registering we yet again pay taxes on that amount as well. The GST will further complicate things IMO.

Seriously? Some new tax is being implemented by the govt, and people are thinking it'll make stuff cheaper?

Fellas, it is a TAX. A tax is a fine for doing well. A fine, well, that is a tax for doing wrong, but who cares :D

As I see it, GST is only going to club all the smaller minute things into one big chunk.

In the rarest of rare events, if it does turn out that the pricing might go down, there's not a snowballs chance in hell of the manufacturers passing the benefit to the common man.

The car manufacturer pay excise when the vehicle leaves the factory.
The dealer pays the sales tax.
There is no set-off today against duty already paid. So we (end buyer) are being double taxed.

However with GST, there is a scope of set-off.

The GST is supposed to be a simple and transparent tax by doing away with multitude of taxes and duties.

Friends, for your easy reference, I'm attaching a documents showing Salient features of Proposed GST Act.

I hope this will help you in understanding.

I dont think the focus of any government in India has been to increase car usage among its citizens, in our country its still a luxury( one reason why car loans do get a tax shield). Also am pretty sure our current urban and highway infrastructure is not designed to handle such traffic. The focus of any government IMO should be on developing public transportation.