Car dealers take ₹2.5K cr cess blow, turn to OEMs

Industry estimates impact for every dealer at ₹3-5 crore

- SOHINI DAS

An unprecedented Goods and Services Tax (GST) rate cut and the beginning of Navaratri shored up car sales considerably, but passenger vehicle dealerships were grappling with a staggering loss of around ₹2,500 crore due to scrapping of compensation cess — which they have already paid — and they have written to the original equipment makers (OEMs) to find a way out, according to an industry source.

“Fresh calculations show that the cess amount which has now gone void from September 22 is around ₹2500 crore. Roughly, this would work out to around ₹3-5 crore per dealer.” he said, adding that dealerships are now waiting for the response from OEMs on how this financial burden could be shared, or if any kind of financial scheme could be worked out.

“OEMs are telling us that they are waiting for clarity before any call can be taken,” said the person quoted above.