GST Cess Hike on SUVs & Luxury cars

1 July, 2017 marked a change in traditional tax system of our country and gave ways to introduction of a new scheme named Goods and Services Tax (GST). Earlier for buying a car one had to pay Excise, NCCD, Auto-Cess, VAT & Model dependent Road & Motor Vehicle Tax.

By  dissolving this complex system Indian government came up with a new system of GST which was contributed of CGST, SGST & Auto-cess. Luxury car makers along with SUV manufacturers had seen potential increase in their sales after long till the time they had to repent over a new Cess hike which came into action from 11 September, 2017.

The Cess has been only increased in the segment where the affordability of the consumers is high. Like the Mid-sized cars, Large cars and SUVs. Small petrol & diesel cars, Hybrid Cars & those having the capacity of 13 passengers made a narrow escape from the hike. Mid-Sized cars will see an exponential hike of about 2% followed by 5% hike in case of Large Cars and a & 7% hike is found in case of SUVs too.

Post GST resulted in decrease of rates of all segments of cars specially Luxury and SUV segment. Rate chart was something which had an overall tax of about  28% on everything apart from an added Cess of about 1% in case of small cars (<1200cc), 3% in case of Mid range cars (>1200cc & <1500cc), 15% in case  of Large cars (>1500cc).

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Various Marketing heads of several renowned automakers expressed disappointment over increased Cess hikes saying “Frequent variations in rates may affect their sales”,”Prices seem to be returning back to pre GST regime therefore, negating the whole GST benefits”, “The hike is indeed very unfortunate and overlooks the contribution made by Automobile Industry in terms of economy of the country” and many more.

“Pre GST Rates have not been restored, Even though there were high chances of an increase upto 10% too, but they only experienced a cess hike of 7%” said Arun Jaitley.

Mid Sized Cars like Honda City, Newly launched Hyundai Verna, Maruti Ciaz and many more will experience a Cess hike of  2%.

Luxury cars like Mercedes C class, BMW 3 series & Audi A4 along with other luxury cars made by Jaguar and Volvo will see a Cess hike of about 5%.

Veteran SUVs spotted on Indian roads like Mahindra XUV500 and Scorpio, Toyota Fortuner, Ford Endeavour to top notch SUVs like Mercedes GLS ,BMW X5 and many more will see a Cess hike of 7%.

Earlier under GST rates most of these cars had a Cess rate of about 15%.