Automobile Industry

Union Cabinet Approves Hike in GST Cess on Luxury Cars & SUVs

Hike in GST Cess on Luxury Cars & SUVs

SUVs and Luxury Cars set to get expensive as Union cabinet approves hike in GST cess on larger cars.

Soon after the implementation of new cess for cars under GST regime, the Union cabinet has passed change in tax structure on SUVs and luxury cars from current 15 per cent to 25 per cent. While the proposal to increase tax on SUVs and luxury vehicles has been passed, the exact time to implement the change will be decided after the law is amended. The next meeting of the panel will be held in Hyderabad on September 9, officials reveal.

On August 5, the GST council had given a nod to raise cess on luxury cars and SUVs. Though, it requires an amendment to the Schedule of Section 8 of the GST Act, 2017. That said, an ordinance needs to be issued to approve legislation or allow change in legislation when the parliament is not in session. Also Read – GST Revision To Make Jeep Compass Rs 1.5 Lakh Pricier

Back in July, car makers announced post GST prices for SUVs which were reduced between Rs 1.1 lakh to Rs 3 lakh. While cars are taxed at the maximum 28 per cent, an additional cess ranging from 1 to 15 per cent is also levied for compensating states for loss of revenue caused by the absorption of central and state levies.

Since the total tax on motor vehicles was reduced considerably compared to the pre-GST rates, the GST Council recommended Central government to increase the tax structure from 15 per cent to 25 per cent to rectify the anomaly.

To bring the total tax incidence around the pre-GST level, the highest compensation cess rate needs to be changed to 25 per cent. At present, large motor vehicles, mid-sized vehicles, SUVs, large cars and hybrid vehicles attract an additional 15 per cent cess along with the 28 per cent tax. While the small petrol vehicles that measure less than 4 meters and derive power from engines less than 1200cc attract 1 per cent cess, whereas the small diesel cars under 4 meters length and 1500cc engine attract 3 per cent tax.

Model Expected New Prices After Additional 10% Cess
Honda City Rs 9.30 lakh to Rs 14.76 lakh
Hyundai Creta Rs 10.20 lakh to 16.09 lakh
Mahindra XUV500 Rs 13.32 lakh to 18.77 lakh
Toyota Fortuner Rs 26.84 lakh to Rs 32.08 lakh
Jeep Compass Rs 16.44 lakh to Rs 22.71 lakh
Skoda Octavia Rs 17.03 lakh to Rs 25.17 lakh
Audi Q7 Rs 77.13 lakh to Rs 85.62 lakh
Maruti S-Cross 8.73 lakh to Rs 12.82 lakh
Mercedes Benz C-Class Rs 42.43 lakh to Rs 49.31 lakh
Mahindra Scorpio Rs 10.53 lakh to Rs 16.51 lakh

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