SUVs, luxury cars to get costlier as GST Council approves hike in cess from 15% to 25%

If you are planning to buy an SUV or a luxury sedan, you may need to hurry up in case you don't want to shell out more. The GST Council has decided to raise the cess on luxury cars from 15 per cent to 25 per cent.

Finance Minister Arun Jaitley on Monday said that GST Council in its 20th meeting held on August 5 considered the issue of raising cess after total tax incidence on motor vehicles after GST has come down.

However, the decision on when to raise the actual cess leviable on the motor vehicles will be taken by the GST Council in due course, Jaitley added.

GST Council recommended that central government may move legislative amendments required for increase the maximum ceiling of cess leviable on motor vehicles falling under headings 8702 and 8703 including SUVs, to 25 per cent instead of present 15 per cent, a government notification said. 

Under the Goods and Service Tax (GST), cars have been placed in the highest tax bracket of 28 per cent. In addition to 28 per cent tax, cars with engine capacity of over 1,500 cc attract a 15 per cent cess over and above peak rate of 28 per cent. After GST implementation, tax including cess on luxury cars and SUVs came down from 50 per cent to 43 per cent.

SUVs, like the newly launched Jeep Compass which is priced at an attractive Rs 14.95 lakh may see an increase in the ex-showroom price if the cess on luxury cars is hiked by an amendment in GST compensation law.  

The hike in cess on luxury sedans and SUVs could play a play a dampener for car manufacturers which had cut prices to pass on the benefits to buyers after GST implementation.

Here are some luxury sedans and SUVs which saw price reduction due to GST

• Honda's premium SUV CR-V has witnessed a price drop of up to Rs 1,31,663.
• Ford's flagship SUV Endeavour became cheaper by up to Rs 3 lakh.
• Tata Motors-owned Jaguar Land Rover had reduced prices of its entire vehicle range in India on an average by 7 per cent to pass on benefit of reduced tax incidence under GST.  Jaguar Land Rover brought down prices of three of its models in India by up to Rs 4 lakh.
• Czech car 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.
• Japanese auto major Isuzu Motors India Pvt. Ltd., had also reduced prices ranging from 6 to 12 per cent across models in accordance with the GST rates.
• Mercedes-Benz has dropped prices by as much as Rs 1.25 lakh for the CLA sedan breaching the upper limit of Rs 7-lakh for the Maybach saloon.
• Hybrid cars have been slapped with 43 per cent tax rates under the new regime, where they were taxed below 31 per cent earlier.
• German luxury car maker Audi has slashed prices of its models in India by up to Rs 10 lakh.