Banks face car loan cancellations after new GST rate cut, as customers reconsider their purchase plans. The cut in GST will reduce the cost of passenger vehicles and encourage buyers to delay or cancel existing loans. Banks face car loan cancellations after new GST rate cut, creating challenges for lenders.
The 56th GST Council meeting earlier this month approved a major reduction in the tax rate for small cars. Vehicles with engines up to 1,200 cc will now attract 18% GST instead of 28%. This sharp cut has directly lowered car prices, prompting many buyers to cancel loans already approved by banks.
The GST reforms will take effect from September 22, the first day of Navratri. Nearly 400 products, including soaps, shampoos, tractors, and air conditioners, will also see lower prices under the new tax structure.
Banks have begun receiving cancellation requests from customers who now prefer to wait for reduced prices before finalizing purchases. While the move benefits consumers, banks may face short-term disruptions as demand for car loans slows down. This reform, however, is expected to boost automobile sales and consumer spending once the new GST rates come into force.
