Understanding What Determines the Final Price of a Car

A lot of factor determines a car purchase cost, as only the material and software costs are not the sole elements that go into a car production. There are a variety of taxes that are levied by the central and state governments that add to the overall cost, resulting in the ballooning of the cost that a buyer needs to bear. 

If you are planning to buy a car, therefore it becomes essential for a person to know the cost of ownership and how much “extra” one will pay in terms of taxes and other expenses. Apart from that, for car loan-related purposes, one can log into a DSA partner app, and there, they can check the offers that are available to get you the desired car that you have selected. 

• Goods and Service Tax (GST)

GST plays the most substantial role in how car prices are determined across India. The GST system applies multiple rates to cars through engine limits together with dimensions along with fuel type distinction between petrol, diesel and electric.

Smaller vehicles face a GST of 28%, while their engine size determines the applicable cess between 1% to 3%. The GST tax rate for Mid-size and Large Cars, along with SUVs and luxury vehicles, consumes up to 15% in addition to 28% GST. The government promotes green mobility by charging Electric Vehicles (EVs) at a 5% GST rate during charging.

The implementation of GST affects vehicle buyers through its influence on ex-showroom prices and results in increased taxation for luxury cars and SUVs than for smaller fuel-efficient vehicle types.

• Road Tax 

Road taxes constitute a state-approved fee through which the government collects from vehicles in their respective registration areas. Charges for road tax differ substantially from state to state, so they play a vital role in establishing the final retail price of a vehicle.

Vehicle owners paid higher road tax amounts in Maharashtra and Karnataka than they did in Delhi. Both states charged different prices for this tax imposition. Car owners must pay road tax as a single payment at vehicle registration, although its amount depends either on the purchase price of the vehicle or its weight and engine size.

The prices of vehicles change significantly based on road tax levels across different states, thus influencing your final payment for the vehicle.

• Registration Charges 

Registration fees accompany any car purchase since they enable you to obtain a valid registration certificate for Indian road usage. A registration certificate becomes accessible through payment of registration fees so that you can drive your car legally on Indian roads. Charges are established through the ex-showroom price together with the vehicle category.

Cars with smaller engines, as well as private vehicles require lesser fees before registration receiving their registration certificate. The registration fee rate for cars follows a two-part system where engine capacity influences the cost, and premium models lead to above-average fees.

The costs of vehicle registration influence the total on-road price of a vehicle despite being lower than GST and road tax regulations.

• Insurance Costs

For a car purchase in the country, one must take insurance for the car they have purchased. Third-party insurance is the minimum criteria that one needs to have to ensure that the vehicle is covered under the insurance. 

From the protection point of view, insurance helps a person to prevent the car from theft, accidents and natural disasters as the insurance company claims to provide compensation in all those incidents. However, with the additional coverage where depreciation cost will not be added, and with roadside assistance, the cost of the insurance starts to go up, which makes it costlier. 

In getting insurance along with the loans a DSA is a perfect candidate who can help you navigate this field. DSA’s full form is Direct Selling Agent and they are the ones who can provide bank loans and also can help in the insurance segment. 

• State-Specific Levies and Gress Cess

Certain states put extra pressure on the buyer of a car as some state-specific taxes work as levies. For example, Delhi has a green cess charge which discourages people from buying petrol or diesel cars. Therefore it makes the ICE cars costly in that area. 

Apart from that, there is a luxury tax, which further adds to the cost of cars that are after a certain price level. These are some of the costs that increase the overall cost of the car after the manufacturer sets the price.