The Indian auto sector surged sharply in early trade on Monday, with leading automobile stocks witnessing strong gains after reports suggested that the Government of India is considering a major relief package for car and two-wheeler buyers under a new Goods and Services Tax (GST) regime.
As of 9:45 AM, auto stocks were trading with significant momentum:
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Hero MotoCorp rose 8.29% to ₹5,098.50
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Maruti Suzuki jumped 7.28% to ₹13,878.00
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Ashok Leyland gained 6.80% to ₹130.25
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Hyundai Motor India advanced 6.32% to ₹2,382.30
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TVS Motor moved up 6.24% to ₹3,208.70
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Bajaj Auto climbed 4.88% to ₹8,614.00
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Mahindra & Mahindra (M&M) rose 4.50% to ₹3,412.40
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Eicher Motors added 3.83% to ₹5,985.00
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Tata Motors gained 2.54% to ₹681.50
The rally comes after Prime Minister Narendra Modi, in his Independence Day speech, hinted at a possible reduction in GST rates for cars, SUVs, and two-wheelers. Currently, small cars attract 28% GST plus a cess of 1–3%, while SUVs are taxed at nearly 50% (including cess).
New GST Regime on the Horizon
According to reports, the government plans to introduce a simplified GST structure with two tax slabs: Merit and Standard.
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The Merit category will feature goods with GST up to 5%.
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The Standard category is expected to attract 18% GST.
The government is also considering scrapping the current definition of SUVs for GST classification, which has long been a point of confusion for automakers. Apart from the automobile sector, the proposed GST rejig could also bring relief to consumers of air conditioners and construction materials.
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