LIVE TV
ZEE Business
ZEE BUSINESS
हिंदी में पढ़ें  हिंदी में पढ़ें
Live TV
Live TV
  • Home
  • Personal Finance
    • PPF
    • Mutual Funds
    • Income tax
    • EPFO
    • Income Tax Calculator
    • Personal Loan Calculator
    • Car Loan Calculator
    • Home Loan Calculator
    • SIP calculator
    • SWP Calculator
    • MF Returns Calculator
    • Lumpsum Calculator
  • India
    • Companies
    • Property
    • Startups
    • Uidai
  • Economy
    • Aviation
  • Tech
    • Mobiles
    • Apps
  • Auto
    • Cars
    • Bikes
  • Markets
    • Commodities
    • Currency
  • Jobs
  • Indian Railways
  • World
    • Economy
    • Politics
    • Markets
  • videos
  • photos
  • Authors
  • More ...
    • VIDEOS
    • PHOTOS
Read in App
Business News » Companies News

After BS-III impact, automobile dealership losses to pile up post GST rollout

Barely two months later after BS-III ban had impacted dealerships, now the GST rollout next month too is expected to have a significant impact on their inventory.

  • Twitter
  • Facebook
  • Linkedin
  • whatapp
  • View in App
After BS-III impact, automobile dealership losses to pile up post GST rollout
Cars parked in an elevated parking area. Photo: Pixabay
Written By: ZeeBiz WebTeam
Updated: Thu, Jun 08, 2017
02:48 pm
Mumbai, ZeeBiz WebDesk
RELATED NEWS
Demonetisation: Car dealerships see near zero sales Demonetisation: Car dealerships see near zero sales
Did Bajaj Auto go back on its promise to take back unsold BS-III stocks from dealers? Did Bajaj Auto go back on its promise to take back unsold BS-III stocks from dealers?
Automobile companies see mixed results in Q4 on BS-III impact Automobile companies see mixed results in Q4 on BS-III impact
Bajaj Auto Q4 review: Exports, Demonetisation, BS-III vehicles ban to play its role Bajaj Auto Q4 review: Exports, Demonetisation, BS-III vehicles ban to play its role
GST impact: Luxury carmakers begin cutting prices GST impact: Luxury carmakers begin cutting prices
Key highlights:
  • Dealerships are expecting a loss of 2.5-5% of the basic price of the inventory pending
  • Dealers cannot get tax credit for local taxes it has already paid
  • Maruti Suzuki, Hyundai Motor India and Bajaj Auto have agreed to absorb the losses to dealers on inventories

Automobile dealerships seem to be having a tough time recently due to the Bharat Stage (BS) III vehicles ban. However, there seems to be another storm coming their way barely a few months after.

Dealerships are expecting a loss of 2.5-5% of the basic price of the inventory pending with them after the goods and service tax (GST) rolls out on July 1, according to an Economic Times report.

This is as several levies paid by the dealerships for the vehicles they purchased from automobile companies will not be refunded by the government, as they are not GST-creditable. This means that they cannot get tax credit for local taxes it has already paid which was set in various states against central taxes charged. However, their sales will have to be taxed under GST from July.

ALSO READ: GST Rates: Car and bike prices to go up? Find out

GST rules state that a dealer cannot avail of input tax credit against things such as central sales tax, infrastructure cess, auto cess, entry tax which is not set-off against local taxes in states such as Madhya Pradesh, Chhattisgarh, Odisha and West Bengal and local body tax in Maharashtra for stock landed in their stockyard before July.

The report further says that dealerships may incur a loss of Rs 1,000 – 3,000 per two-wheeler and Rs 8,000 – 40,000 per passenger car.

Automobile dealerships had incurred heavy losses as many had to either absorb the losses on the pending inventory as many automobile companies did not take back the stocks.

Around Rs 12,000 crore of stock went unsold after the BS-III ban and this included stock of dealerships too.

However, in the case of GST the report said that companies such as Maruti Suzuki, Hyundai Motor India and Bajaj Auto have agreed to absorb the losses to dealers on inventories.

Mails have been reportedly sent to dealers promising them financial support. However, this is subject to them meeting their sales targets.

ALSO READ: GST implementation in July may slow down automobile sales next month

For instance, it said that Maruti Suzuki has told that a dealer should sell 1.3 times his sales target to recover the entire loss due to the GST transition. Dealers who sell between 1.15 and 1.3 times the target will get 85% of the loss reimbursed. Meeting the target will mean 75% reimbursement and missing the target means no compensation for dealerships.

Bajaj Auto too said it would compensate dealerships for unsold inventory for three months before the commencement of GST. It will however not compensate for unsold stocks at the sub-dealer level.

ALSO READ: Did Bajaj Auto go back on its promise to take back unsold BS-III stocks from dealers?

Even Hyundai Motors said it would compensate dealerships for the loss incurred due to the non-credit of tax levied.

While automobile companies may promise compensation it is subject to various terms and conditions, which could mean them not recovering the losses.

This was seen earlier as there were protests by dealers and sub-dealers of Bajaj Auto in Punjab over compensation from the company over unsold BS-III stocks. This was after Bajaj Auto promised to compensate dealers over the unsold BS-III stocks.

With such losses incurred by these dealerships, it remains how these dealerships will go ahead.

Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.

TAGS:
Goods and Service TaxGSTGST rolloutDealershipsAutomobiledealership losses GSTBS-IIIMaruti SuzukiHyundaiBajaj AutoAuto
RELATED NEWS
Demonetisation: Car dealerships see near zero sales Demonetisation: Car dealerships see near zero sales
Did Bajaj Auto go back on its promise to take back unsold BS-III stocks from dealers? Did Bajaj Auto go back on its promise to take back unsold BS-III stocks from dealers?
Automobile companies see mixed results in Q4 on BS-III impact Automobile companies see mixed results in Q4 on BS-III impact
Bajaj Auto Q4 review: Exports, Demonetisation, BS-III vehicles ban to play its role Bajaj Auto Q4 review: Exports, Demonetisation, BS-III vehicles ban to play its role
GST impact: Luxury carmakers begin cutting prices GST impact: Luxury carmakers begin cutting prices

LATEST NEWS

Shravan Rathod of Nadeem-Shravan fame DIES due to Covid 19-related complications

Anil Singhvi picks Jubilant Industries as his 'SIP STOCK' today, know the reason WHY

Stocks in Focus on April 23: Indus Tower, Rallis, Lupin, Gland Pharma to Banks; here are the 5 Newsmakers of the Day

CBSE Class 10 Board Exam 2021 Result: BIG NEWS! Students DON'T MISS this LATEST UPDATE - all details here

Banks asked to cut working hours, attendance by IBA, says report; these 4 services to remain unaffected

KVS Admission List 2021-22: Provisional selection list for class 1 to be released today POSTPONED, revised date to be notified on kvsonlineadmission. kvs.gov.in soon - check details here

Delhi Schools Summer Vacation 2021 RESCHEDULED; private schools asked to suspend online teaching and learning activities - check details here

Gold price today 23-04-2021: Expert suggests buying at around Rs 47650 for target of Rs 48200

Anil Singhvi’s Strategy April 23: Day support zone on Nifty is 14,250-14,300 & Bank Nifty is 31,200-31,400

Apex Legends Mobile: Check release date, system requirements, pre-registration link, and other important details

  • India News
  • World News
  • Companies News
  • Market News
  • Personal Finance News
  • Technology News
  • Automobile News
  • Small Business News
  • Income Tax Calculator
  • Live TV
  • Videos
  • Photos
  • Author
  • Rss Feed
  • Advertise with us
  • Privacy Policy
  • Legal Disclaimer

Latest Trending Updates

  • EPFO
  • Budget 2020
  • Income Tax Return
  • Auto Expo 2020
  • Home Loan
  • Business News

Trending Topics

  • Income Tax
  • income Tax Calculator
  • 7th Pay Commission
  • Reserve Bank of India
  • GST
  • Latest Business News

Follow us on

zeebiz
zeebiz

Partner Sites

  • Zee News
  • Hindi News
  • Marathi News
  • Bengali News
  • Tamil News
  • Malayalam News
  • Gujarati News
  • Telugu News
  • Kannada News
  • DNA
  • WION
Copyright © Zee Media Corporation Ltd. All rights reserved