When purchasing a new vehicle in India, understanding the pricing structure is essential. Terms like ex-showroom price and on-road prices are associated with it. Often a question arises, what do these prices cover including taxes?

One common query is, "Does the ex-showroom price include GST?” Learning the role of GST in pricing will help make buyers make informed decisions.

In this blog, we will discuss the details of ex-showroom prices, influencing factors of ex-showroom prices, and other important aspects.

What Is the Ex-Showroom Price?

The ex-showroom price is the cost of the vehicle, excluding the charges paid for the vehicle registration at the Regional Transport Office (RTO), Road Tax and Insurance.

Following are some of the points which explain the meaning of ex-showroom cost better:

1. The ex-factory cost, profit margin of the vehicle dealer and the Goods and Services Tax (GST) are included in the ex-showroom price.
2. The ex-showroom pricing is the actual price at which vehicles are put in advertisements.
3. Not abiding by the rules of insurance, road tax and RTO can lead to heavy penalties.

In addition to this, the octroi tax can be included in the ex-showroom price in multiple states and cities. The local government levies this tax on items purchased for consumption from out of the territory. Therefore, it is essential to review the ex-showroom price for the specific city or state.

What Is the On-road Price?

On-road price, as the name suggests, is the price that you have to pay to bring your car or bike to the road from the showroom. Go through the points below to understand the meaning of on-road price better:

1. The registration fee, insurance plan, road tax and ex-showroom price are included in the on-road price.
2. For instance, in case you wish to add some new accessories to your new vehicle, the dealer can add that cost to the on-road bill of the vehicle.

Influencing Factors of Ex-showroom Price

The primary influencing factors of ex-showroom price are:

1. Green Cess

After the prohibition on diesel automobiles in the National Capital Region (NCR) and Delhi, the Government of India has made a 1c/o green cess legal on the ex-showroom price. This will be applicable to all vehicles, which are travelling in India.

However, it is important to remember that this tax is applicable only on cars with an engine capacity exceeding 2000cc. If you are purchasing a car with an engine capacity smaller than 2000cc. The exact percentage varies as per the government policy.

2. Accessories

Accessories depend on the purchase. Some can opt for a religious icon while some can opt for decorators. These are priced more than various aftermarket alternatives. In the case of essential accessories, some of the most common ones are seat covers, floor mats, etc.

You may purchase them for an additional cost from a shop or car dealer. In case you purchase from the dealer, it will be reflected in the on-road price of the vehicle. In the case of extra accessories, you may opt for an expensive helmet or entertainment system by bearing the additional expense.

3. Road Tax

Road tax is a one-time fee which you need to pay for the initial 10 or 15 years after you have purchased the new vehicle. This fee is on the basis of ex-showroom price in addition to a percentage varying from 3% and 20%. This is a tax that you pay to drive your vehicle on the Indian road lawfully.

4. Tax Collection at Source

As per the Government of India’s statutory procedure, a tax of 1% has been made mandatory on vehicles, which is more than ₹10 lakh. If this tax is levied, the buyers will get a certificate which they need to submit during tax filing.

5. Insurance

As per the Motor Vehicles Act, car insurance is a requisite. If you fail to insure your vehicle, it will lead to heavy penalties. Third-party, zero-depreciation and comprehensive are three types of available insurance policies. Third-party insurance is the least expensive and zero-depreciation insurance is the costliest.

You have an option in the case of insurance policies. Comprehensive Policy offers 'Own Damage' cover. It not only insures your car but also offers the benefit of third-party insurance coverage.

Some car dealers have tie-ups with various insurance providers. It is essential you purchase a policy that caters to your needs.

6. Fees for Registration

Automotive registration, whether it is a four-wheeler, motorcycle or heavy-duty truck, is a requisite in Indian legislation. You must register it with your local RTO office. In case you fail to register, driving on highways will be considered unlawful. The registration charge is the price that RTO pays in return for a unique number's allocation.

The number plate of a vehicle displays the State Code, which is an alphabetic code and the Area Code/RTO, which is the numerical code. The registration charges, however, are different in each state. In case you want a special registration number, you are entitled to extra charges.

7. Handling Charges

Usually, the dealer’s margin covers the charges for transportation of the vehicle from the factory to the dealer. In case you wish the vehicle to be delivered to a specific location, it is advisable to discuss it with the dealer directly.

8. Annual Maintenance Charge

The Annual Maintenance Package which a car dealer offers essentially comprises vehicle polishing, servicing, cleaning, roadside assistance and other services. It is advisable to check if roadside coverage is offered by your insurance policy. If it is offered, you do not need to opt for this service from the dealer.

9. Extended Warranty

A warranty period or manufacturer's warranty is offered with most new vehicles. It is either restricted by the distance travelled or by time. For example, the warranty can either be time-bound, i.e., one year or on the basis of kilometres covered by the vehicle.

However, you are eligible to extend this warranty by making extra payments. The cost which you pay for the extended warranty is included in the on-road price of the vehicle.

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Does Ex-Showroom Price Include GST?

The ex-showroom price of a car is considered as the base price. It includes Goods and Services Tax, the dealer profit margin and the manufacturing cost.

How to Get an Effective On-road Price?

Here are some primary points you must consider before deciding on the on-road price of your new vehicle:

• Registration Charges

Registration charges fall under the category of essential expenses. In this case, you can avoid over-expenditure by not opting for special registration numbers.

• Accessories

It is essential to fix a budget before proceeding with the purchase. It is recommended to abide by the budget and avoid engaging in unnecessary expenses.

• Extended Warranty

Consider the usage of the vehicle before making payment to extend the warranty period. If the warranty is on the basis of kilometres covered, make an estimation of the time that will be taken to cover that distance. This will ensure that your purchase is budget-friendly.

• Dealer Discount

Certain vehicle dealers offer special discounts on cars which you purchase from their showroom. Consider searching for the best possible deals within your budget to avail a good on-road price for your vehicle.

• Annual Maintenance Package

A vehicle which is used extensively for off-roading, road trips, etc. needs more servicing than other cars which are used for regular purposes. Consider the usage of your vehicle and decide if you need to take a yearly package from the car dealer or if it will be more beneficial to opt for a pay-per-service to another service centre.

• Seasonal Offers

Car dealers sometimes offer attractive offers in some seasons like festivals. They offer various package deals, discounts, etc. You can make your purchase during these seasons to avail such offers.

 Conclusion

Now that we have the answer to the question “does ex-showroom price include GST?”, we can understand the role of GST in ex-showroom price. The addition of GST in this price simplifies the buying process, providing transparency. The changes brought by GST have not only improved pricing structures but also affected consumer behaviour and the broader automobile market.

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