Banks Face Car Loan Cancellations Ahead Of Sept 22 GST Deadline

New Delhi- Banks are receiving requests for cancellation of approved car loans, in view of the implementation of GST rate cut, which will lower the price of passenger vehicles and also lead to subsequent reduction in the amount needed to purchase them.

It is to be noted that the 56th GST Council meeting earlier this month, approved substantial reduction in the GST rate for cars for up to 1,200 cc to 18 per cent from the existing 28 per cent.

Nearly 400 products – from soaps to cars, shampoos to tractors and air conditioners – will cost less when the rejig of the GST is effective from the first day of Navaratri on September 22.

In a run up to September 22, some of the customers who had their car loan approved, are now contacting the concerned branch for cancellation, as they want to purchase after the GST cuts are implemented, a senior official of a public sector bank said.

The official further said since the cancellation charges are very low compared to the benefit that they will get after September 22, borrowers are opting for a fresh loan process once the rate cuts kick in.

It is to be noted that many banks have waived-off their processing charges on vehicle and home loans to attract customers during the monsoon period.

According to a senior official of the Central Board of Indirect Taxes and Customs (CBIC), the old GST rate would be applicable on cars if the invoice has been issued to customers by the car dealer.

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