Spare Part prices before & after GST

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The prices of automobile spare parts have fallen after the implementation of the Goods and Service Tax (GST). While the tax on labour has gone up from 15% to 18%, the reduction in the prices of spare parts has resulted in lower overall bills at the service centre.

Before the implementation of GST, an excise duty (12.5%) as well as VAT (14.5%) were imposed on spare parts. The excise duty was based on the MRP of the product (with an abatement), while the VAT was charged on the sum of the selling price and excise duty. There were other levies as well including cess, local body taxes, octroi, etc. that varied from one place to another.

According to the current GST rates, the majority of automobile spare parts fall under the 28% tax slab, while a few are under the 18% slab. For parts under the code 8708, with the description 'parts and accessories of the motor vehicles of headings 8701 to 8705', the rate of GST imposed is 28%, divided equally between the state and the centre. Parts like rubber hoses (code 4008 / 4009) and screws and nuts & bolts (code 7318) attract a lesser rate of GST (18%).

Before the introduction of GST, if a part that was sold by a company for Rs. 1,000 to a service centre that added a margin of Rs. 155, the customer would have paid Rs. 1,917. The same will now cost Rs. 1,836 - a saving of Rs 81. In this case, for the purpose of calculations, the MRP is assumed to be Rs. 2,000, excise duty @ 12.5%, abatement @ 30%, VAT @ 14.5% and GST @ 28%.