SUVs, Luxury SUVs To Cost More As GST Council Approves Hike in Cess

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 15 per cent to 25 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 deciding the rates, that needed rectification. The council was headed by Finance Minister Arun Jaitley.

Also Read: GST Impact On Cars And SUVs

Arun Jaitley, Minister of Finance said, "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. It recommended that Central Government may move legislative amendments to increase max ceiling of cess on motor vehicles to 25 per cent from present 15 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, 2017

 

It recommended that Central Govt may move legislative amendments to increase max ceiling of cess on motor vehicles to 25% from present 15%.

— Ministry of Finance (@FinMinIndia) August 7, 2017

 

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, 2017

Under the GST rates, cars will attract the top rate of 28 per cent with a cess in the range of 1-15 per cent on top of it. While small petrol cars with engine less than 1,200 cc will attract 1 per cent cess, that with a diesel engine of less than 1,500 cc will attract 3 per cent cess. Large cars with engine greater than 1,500 cc and SUVs with length more than 4 metres and engine greater than 1,500 cc will attract a cess of 15 per cent. This is levied on top of the 28 per cent that is already in place, which adds up to a total of 43 per cent. An additional 10 per cent increase will increase the GST rate on these SUVs to 53 per cent. However, the prices of these vehicles will not be increased immediately 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 increased 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 5 years.

Also Read: GST Discounts On Cars

Post July 1, several automakers passed on the GST benefits to its customers ranging from Rs 1,300 to Rs 10 lakh. Car-makers like Mercedes-Benz, BMW, Audi, JLR, Bentley, Hyundai etc offer high-end luxury SUVs in India.

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