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Luxury cars are expected to become cheaper by 4-8% once the goods and service tax (GST) structure kicks in on July 1. Expecting slow sales in June, anxious luxury carmakers such as Mercedes-Benz and BMW are right away passing on the effective benefit of the new tax structure to the customers .

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Under the new tax regime, luxury vehicles will attract a 28% GST, besides a maximum cess of 15%, so the maximum duty one would end up paying is 43%. At present, the effective tax on ex-showroom prices of luxury vehicles is around 52-55%.

Leading the pack bracing for GST impact, BMW India announced passing on the benefit of GST to its customers May 20 onwards, besides also offering additional benefits to effectively drop its car prices by up to 12%.

“The combination of additional benefits from BMW India that can be availed along with GST benefits on select models are: reduced rate of interest of 7.90%, complimentary service and maintenance for three years, complimentary insurance for one year and assured buyback up to four years,” BMW India said in a statement.

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The effective price drop would be up to 12%, depending on the model and the place of purchase, the company said, adding that the offer will be valid for limited period or until stock lasts.

BMW India produces luxury hatchback 1 Series; luxury sedans of 3 Series, 5 Series and 7 Series; the BMW 3 Series Gran Turismo; and the SUVs X1, X3 and X5 at its Chennai plant. Besides, it imports completely built-up units of the 6 Series Gran Coupe, M6 Gran Coupe and M4 Coupe, the SUVs X6, X5 M and X6 M; sports sedans M3 and M5 and the Z4 roadster. The Munich-based carmaker also imports the BMW i8, its flagship electric car as CBU in India, which comes at Rs 2.14 crore (ex-showroom Delhi).

Volkswagen AG’s premium brand Audi India also on Friday reduced ex-showroom prices of its entire car range to offset the impact of GST launch on its May and June sales.

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The price drop ranges from Rs 1.5 lakh on its entry-level models to Rs 10 lakh on top-end models, and will be effective immediately till June end, a dealership source told HT.

Audi India sells a range of premium vehicles — luxury SUVs Q3, Q5 and Q7; sedans A3, A4, A6 and A8; and sports cars Audi TT, Audi RS6, Audi RS7, Audi RS8 — priced between Rs 30.5 lakh and Rs 1.15 crore.

“As opposed to the market trend, this is not a measure to clear old stock; we are extending the benefits on our new cars as well,” Audi India head Rahil Ansari said in a statement.

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Mercedes Benz India too on Thursday announced passing the GST benefit to the customers, which is an average 4% across its ‘made-in-India’ range. The difference in the pre- and post-GST enforcement prices for the customer is Rs 1.4 lakh to 7 lakh.

Mercedes Benz produces nine models in India priced between Rs 32 lakh and Rs 1.87 crore (ex-showroom Delhi). These include CLA sedan, SUVs GLA, GLC, GLE and GLS, and C-Class, luxury sedans E- Class, S -Class and Maybach S500.

While the exact impact of the GST will be seen in months to follow, other luxury carmakers may also look to encash the opportunity, some to clear stocks faster while others to offset the expected drag in sales.

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