Tata, M&M shares are a report on higher GST for luxury EVs Sparks.

Shares of car manufacturers Tata Motors and Mahindra & Mahindra came under pressure on Monday after reports emerged that the Group or Ministers (GOM) panel suggested that they increase GST on luxury electric vehicles. Tata Motors fell by 1%, while M&M lost more than 2%. Hyundai also deposited 0.2% lower.

The move occurs at the GST Council meeting of 3-4 September, which will make a final call on the proposed tax decisions. The panel has proposed to lift GST on EVs priced between RS 20 Lakh and RS 40 Lakh to 18%, an increase in the current 5%. For EVs above RS 40 Lakh, the rate could rise to 28% or even fall under a proposed new 40% plate for certain luxury goods.

Prime Minister Narendra Modi had announced GST reforms in his speech from Independence Day, in which a simpler tax structure was called. Cars are currently taxed at 28% GST plus a stop up to 22%, while EVs have a concessional 5% rate to encourage adoption.

The proposed changes can affect the demand for high-end EVs of players such as Tesla, Mercedes-Benz, BMW and BYD. Tesla, who recently started taking bookings in India with his model Y priced around $ 65,000, can be influenced in particular.

Impact on domestic players

Although Tata Motors and M&M only have limited offers above the RS 20 Lakh bracket, investors are concerned that higher taxes can delay overall EV acceptance. TATA Motors is currently leading the EV -passenger car market with almost 40% share, followed by M&M with 18%. Foreign players dominate the luxury segment, where Mercedes and BMW together have about 2% of the Indian EV market, while BYD has 3%. Tesla has opened showrooms, but deliveries have been slow to start.

Auto sales dip for gst rejig

The sale of passenger vehicles in August fell in August when buyers postponed purchases pending price changes under the new GST framework. Maruti Suzuki, the largest car manufacturer in the country, reported a decrease of 8% in shipments, while Hyundai, Tata and M&M also saw weaker numbers.

With the council meeting on just a few days, investors are waiting sharp in anticipation of whether EVs will continue to enjoy policy support or get a sharp reversal in tax benefits.

(Disclaimer: recommendations, suggestions, views and opinions of the experts are their own. These do not represent the views of economic times)