SUVs, Luxury SUVs To Cost More As GST Council Approves Hike in Cess
Highlights
The Goods and Service Tax (GST) Council on Sunday approved an amendment that will see an increase in the current cess levied on Sport Utility Vehicles (SUVs) and high-end luxury SUVs from current fifteen per cent to twenty five per cent. This comes after the Centre, along with several states requested the GST council to amend the current cess on these vehicles as an “anomaly” has crept in while determining the rates, that needed rectification. The council was headed by Finance Minister Arun Jaitley.
Arun Jaitley, Minister of Finance said, “GST Council in its 20th Meeting held on 5th Aug, two thousand seventeen considered the issue that total tax incidence on motor vehicles after GST has come down. It recommended that Central Government may budge legislative amendments to increase max ceiling of cess on motor vehicles to twenty five per cent from present fifteen per cent. However, the decision on when to raise the actual cess leviable on the motor vehicles will be taken by the GST Council in due course.”
GST Council in its 20th Meeting held on 5th Aug,2017 considered the issue that total tax incidence on motor vehicles after GST has come down
— Ministry of Finance (@FinMinIndia) August 7, two thousand seventeen
It recommended that Central Govt may stir legislative amendments to increase max ceiling of cess on motor vehicles to 25% from present 15%.
— Ministry of Finance (@FinMinIndia) August 7, two thousand seventeen
However, the decision on when to raise the actual cess leviable on the motor vehicles will be taken by the GST Council in due course.
— Ministry of Finance (@FinMinIndia) August 7, two thousand seventeen Under the GST rates, cars will attract the top rate of twenty eight per cent with a cess in the range of 1-15 per cent on top of it. While petite petrol cars with engine less than 1,200 cc will attract one per cent cess, that with a diesel engine of less than 1,500 cc will attract three per cent cess. Large cars with engine greater than 1,500 cc and SUVs with length more than four metres and engine greater than 1,500 cc will attract a cess of fifteen per cent. This is levied on top of the twenty eight per cent that is already in place, which adds up to a total of forty three per cent. An extra ten per cent increase will increase the GST rate on these SUVs to fifty three per cent. However, the prices of these vehicles will not be enhanced instantly as it requires amendment to the GST compensation law and will only come into effect next month.
There is mutual consent amongst members of the GST Council to have cess on high-end luxury cars and SUVs to be on the higher side so that it can be enlargened if the need arises. Moreover, under the Compensation to the States for Loss of Revenue Bill, 2016, the Centre will compensate the states for any loss in revenue due to the implementation of GST for a period of five years.
Post July 1, several automakers passed on the GST benefits to its customers ranging from Rs 1,300 to Rs ten lakh. Car-makers like Mercedes-Benz, BMW, Audi, JLR, Bentley, Hyundai etc suggest high-end luxury SUVs in India.
“This decision once again reiterates the need for a long-term roadmap for the luxury car industry, which has been at the receiving end of arbitrary policies. The constant shift in policy makes our long-term planning for the market very risky, and we think this would only have an adverse influence on the country’s financial ratings. By making better technology more expensive, the Government is causing more harm to the environment and slowing down the overall growth rhythm of the country’s economic growth, which it is striving to achieve.”
He added, “Keeping in mind the proposed increase in cess, we have introduced “Unbeatable” offers on our best-selling cars, this is an opportune time to join the Audi family and additionally also benefit from the privileges of the Audi Club India. Customer Delight is at the centre of Audi’s concentrate and we are sure that the current offers will delight the Audi enthusiasts.”
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