The government has proposed to increase cess on vehicles above four meters from the current 15% to 25%, taking the total tax to 53%. Vehicles that come under this category include SUVs, premium sedans etc. The Ministry of Finance has sent out a notification regarding an amendment to the GST act, while there is yet no clarity on the timeline for the implementation of the changed cess structure, a decision on which will be made later by the GST council. The issue regarding the drop in total tax on motor vehicles post GST was reviewed by the GST council in its 20th meeting held on August 5, 2017. The GST council is yet to make an official announcement after its next meet in September. One must note that the revised cess will be restricted to large cars and SUVs, whereas the GST rates will remain unchanged for other vehicles. Read More – Toyota Fortuner | Jeep Compass
Opposing the raise in cess levied on vehicles above four meters, carmakers are strongly condemning the proposal, fearing sharp drop in sales post the implementation of new rates.
Large vehicles benefitted the most from the changed tax structure under GST, however with fluctuations in tax rates, the growth of such vehicles is likely to be impacted adversely. Post GST, some states had also raised road tax rates which is going to make things worse in that region. Some carmakers fear that the hike will not only affect car sales but it will also impact dealers, customers and industry workers, attenuating industry’s growth.
After the implementation of GST, all carmakers had passed on benefits to the end users (customers) by reducing prices of models by a substantial margin. That said, popular cars like Toyota Innova and Toyota Fortuner witnessed drop in price by Rs 1 lakh to Rs 2 lakh respectively. Price of Hexa range reduced by up to Rs 2.17 lakh and Hyundai also slashed prices of Creta and Santa Fe. On the contrary, with 10% hike in cess, the prices of such vehicles will be changed upwardly, passing on the burden to the customers. Here’s a look at prices of some popular models post the implementation of new tax rates.
| 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 |
