GST on Luxury Cars, SUVs revised to 50% (28% GST + 22% Cess)
GST on Luxury Cars, SUVs revised to 50% (28% GST + 22% Cess)
GST Cess Hike on Large Cars to be Made Effective Starting Today
12 September, 2017, 02:00
This brought the pre-GST tax total to 44.5%. For large cars total tax incidence has gone to 48% from 43% on the back of 5% increase in cess to 20%.
It said that auto prices had dropped by up to Rs 3 lakh as the tax rates fixed under the GST, which came into effect from July 1, were lower than the combined central and state taxes in pre-GST days.
Now under the revised GST tax rates the total tax incurred by mid-sized cars in India will be 45%. SUVs like Mahindra and Mahindra Scorpio and XUV500, Renault Duster, Toyota Fortuner, Ford Endeavour to luxury ones like Land Rover Discovery, Audi Q3, Q5 and Q7, BMW X3 and X5, along with Mercedes GLA, GLC and GLS will all see prices going up by 7 per cent.
"However, the long standing anomaly in the taxation of 10-13 seater vehicles could have been fully corrected and these should have been fixed at a GST rate of 28 percent without any cess as these are public transport vehicles and not for personal use", added Mathur.
Accordingly, plastic raincoats and rubber bands have been fitted in the slab of 18 percent and 12 percent, respectively, as against the earlier 28 percent. Last week, an ordinance was promulgated to hike the cess from 15% to up to 25%.
The companies said the constant changes in rates could lead to market instability and affect demand growth trends, expressing disappointment that the Council's decision "totally overlooked" their contribution to the industry and the economy. "... Whether this is sustainable or not, we will have to wait and see", Mr. Mathur emphasised.
Mahindra and Mahindra MD Pawan Goenka said: "We are awaiting the exact definition of the categories". The date of implementation of the additional cess will be notified later. After the GST Council meet on Saturday, Finance Minister Arun Jaitley had said that in the case of large vehicles, where affordability of consumers is high, the cess has been increased. "We will need to study the impact of this hike on the buyer sentiment".
"In FY18, CARE Ratings expects passenger vehicles segment to witness gradual pickup in demand as the effect of demonetisation, ban on BS-III vehicles and GST implementation begins to moderate starting Q3 FY18".
He said that though luxury auto industry's volume contribution is very low, their value wise contribution is much higher and that has enormous potential to grow even more in the future, had there been fair taxation.
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