SUVs, Luxury Cars Could Cost More, Cess Likely To Go Up

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With pressure building up from states, the Goods and Services Tax (GST) Council will soon start publishing rates of various products to prod companies to pass on gains, including those from input tax credit, says a Times of India report.

Well, it might prove to be a wise decision to hurry and buy an SUV or luxury vehicle now because the taxman's noose could be tightening again on the segment. Currently, the levy on these vehicles, including the 28 per cent GST and the 15 per cent cess, adds to 43 per cent.

In an official statement issued today, the GST Council has recommended an increase in the maximum ceiling of the cess on motor vehicles. 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. It should be noted that pre-GST taxes on SUVs amounted to 55.3 per centand those on bigger cars stood at 51.8 per cent.

According to a report in The Economic Times, the GST council approved an amendment to the GST law to enable an increase in the rate of levy of compensation cess.

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Shares of automobile companies such as Mahindra & Mahindra was down by 1.36% or Rs 19.25, at Rs 1,399.05 per piece and Tata Motors was down 1.06% or Rs 4.60, at Rs 430.50 per piece at 15:19 hours on BSE. In addition to this there are State GST taxes. Small petrol cars attract a cess of 1%, while small diesel cars attract a cess of 3%, besides the 28% GST rate.

Czech vehicle maker Skoda reduced prices of Superb model range by up to 7.3 per cent, resulting into a price benefit of up to 2.4 lakh.

The cess will boost the Centre's kitty meant to compensating states for revenue losses in the wake of shifting to the new indirect tax regime. However, this was much lower than the previous tax rate of 47-55% depending on the State taxes, which resulted in a reduction in prices of auto makers.

The cess was introduced for compensating the states any loss of revenue because of GST imposition.

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