Revision in the GST tax structure will make SUV/luxury cars more expensive - watsupptoday.com
Revision in the GST tax structure will make SUV/luxury cars more expensive
Posted 08 Aug 2017 11:53 AM

Agencies

A possible revision in the GST tax structure will make SUV/luxury cars more expensive by increasing the cess by 10 per cent.

After the GST rollout, the cess on luxury cars/SUVs was set at 15 per cent. Combine this with the 28 per cent GST (14 per cent S/I + 14 per cent C), and the total comes to 43 per cent. Now though, the 15 per cent cess is pegged to be increased to 25 per cent. This will take the total to 53 per cent, a 10 per cent increase. The cess on small petrol (less than 4m in length and engine capacity less than 1200cc) cars is 1 per cent whereas on small diesel (less than 4m in length and engine capacity less than 1500cc) cars, it is 3 per cent. On all other cars (except electric), it is currently 25 per cent.

This revision will not take effect immediately, giving the potential buyers some time to take advantage of the situation and get these machines before the hike. The revision of the cess will be passed after an amendment to the GST compensation law, which will take its fair amount of time.
It is interesting to note that the term ‘luxury car’ is defined in the government's books as a car which is over 4 metres in length and has an engine bigger than 1.5 litres in capacity, while midsize cars are more than 4 metres with less than 1.5-litre engine capacity. As of now, midsize cars, luxury cars and SUVs all fell under the same tax umbrella. But now, as per this definition, midsize cars like the Volkswagen Vento (petrol), Skoda Rapid (petrol) and the to-be-launched Hyundai Verna, which come with 1.6-litre engines, straight away face a disadvantage. As per the new revision, the 1.6-litre variants of these cars will fall under the luxury cars bracket and will face the hiked 53 per cent cess while their competition faces a 43 per cent tax, which seems a bit unfair.
Whatever the reason might be, a 10 per cent hike on these cars looks evident. So, if you are planning to get one of these "monsters", we suggest you delay no further.

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