New regime, old problems for car dealers

Sit on unsold inventory for which the route to claim compensation cess balance still unclear

- SOHINI DAS & ANJALI SINGH

As the new rates of goods and services tax (GST) become effective on Monday, car dealers are sitting on estimated inventories of 500,000 units, for which claiming the balance of the compensation cess is unclear. At the beginning of September, dealers had an unsold stock of around 600,000 and around %4,000 crore of compensation cess paid on these vehicles.

According to dealer sources, this has come down to 500,000. While the cess balance has not been accounted for, according to rough calculations the vehicles sold would roughly account for *500 crore-800 crore worth of that. This still leaves a significant amount of the cess balance to be recovered.

During the final weekend, several dealers in the country tried to generate last-minute invoices on vehicles for retail, said dealer sources.

“The worry is for high-value cars, for which the cess is higher. Dealers had resorted to discounting during September in order to clear some inventories. Not much has moved. There will be footfall in dealerships during the weekend as Pitru-Paksh ends as well now,” said a dealer who handles multiple brands of cars in eastern India.