Luxury Cars and SUVs Won’t Be Cheaper Anymore, GST Increase On Cars


The GST roll-out proved to be a great decision for many new luxury cars and SUV buyers as the new tax structure made these vehicles comparatively cheaper. But, now, the situation will change. Luxury cars, SUVs and mid-sized cars that got cheaper due to GST effect on July 1, will soon get pricier. The cabinet has approved increasing of cess on luxury cars and SUVS to 25{52fc1907a0a3de5bb99ec1823a272c73f9cf5bae2273755893d388ae640ff405} (which is currently 15{52fc1907a0a3de5bb99ec1823a272c73f9cf5bae2273755893d388ae640ff405}). The GST Council has suggested the central government to move legislative changes that are vital to increase the cess.

When the amendments will be made, the GST Council will declare the date from which the hiked rates will go on effect. The panel is scheduled to have a meeting in Hyderabad on September 9.

Reasons for higher tax

car-Luxury-carsThe total tax incidence on car, which included both GST and cess, saw a huge fall in comparison to the total tax incidence before GST. The GST council discussed this in its 20th meeting on August 5. It then recommended Central Government to move legislative changes that are needed to increase max cess charged on cars from 15{52fc1907a0a3de5bb99ec1823a272c73f9cf5bae2273755893d388ae640ff405}-25{52fc1907a0a3de5bb99ec1823a272c73f9cf5bae2273755893d388ae640ff405}.

The proposed change in rate will negatively affect mid-segment cars, SUVS, large and hybrid cars. All these attract a 15{52fc1907a0a3de5bb99ec1823a272c73f9cf5bae2273755893d388ae640ff405} cess at the moment. It is still to become clear is cess on small cars which is currently 1{52fc1907a0a3de5bb99ec1823a272c73f9cf5bae2273755893d388ae640ff405} for petrol cars and 3{52fc1907a0a3de5bb99ec1823a272c73f9cf5bae2273755893d388ae640ff405} for Diesel cars will also be increased.

Existing GST Rates on Cars

Under 4-metres Under 1.2-litre Petrol 31.5{52fc1907a0a3de5bb99ec1823a272c73f9cf5bae2273755893d388ae640ff405} 29{52fc1907a0a3de5bb99ec1823a272c73f9cf5bae2273755893d388ae640ff405} 2.5{52fc1907a0a3de5bb99ec1823a272c73f9cf5bae2273755893d388ae640ff405}
Under 4-metres Under 1.5-litre Diesel 33.25{52fc1907a0a3de5bb99ec1823a272c73f9cf5bae2273755893d388ae640ff405} 31{52fc1907a0a3de5bb99ec1823a272c73f9cf5bae2273755893d388ae640ff405} 2.25{52fc1907a0a3de5bb99ec1823a272c73f9cf5bae2273755893d388ae640ff405}
Under 4-metres Above 1.2-litre Petrol or 1.5-litre Diesel 44.7{52fc1907a0a3de5bb99ec1823a272c73f9cf5bae2273755893d388ae640ff405} 43{52fc1907a0a3de5bb99ec1823a272c73f9cf5bae2273755893d388ae640ff405} 1.7{52fc1907a0a3de5bb99ec1823a272c73f9cf5bae2273755893d388ae640ff405}
Above 4-metres Above 1.2-litre Petrol or 1.5-litre Diesel 51.6{52fc1907a0a3de5bb99ec1823a272c73f9cf5bae2273755893d388ae640ff405} 43{52fc1907a0a3de5bb99ec1823a272c73f9cf5bae2273755893d388ae640ff405} 8.6{52fc1907a0a3de5bb99ec1823a272c73f9cf5bae2273755893d388ae640ff405}
SUVs 55{52fc1907a0a3de5bb99ec1823a272c73f9cf5bae2273755893d388ae640ff405} 43{52fc1907a0a3de5bb99ec1823a272c73f9cf5bae2273755893d388ae640ff405} 12{52fc1907a0a3de5bb99ec1823a272c73f9cf5bae2273755893d388ae640ff405}
Hybrids 30.3{52fc1907a0a3de5bb99ec1823a272c73f9cf5bae2273755893d388ae640ff405} 43{52fc1907a0a3de5bb99ec1823a272c73f9cf5bae2273755893d388ae640ff405} – 13.3{52fc1907a0a3de5bb99ec1823a272c73f9cf5bae2273755893d388ae640ff405}
Electric Vehicles (EVs) 20.5{52fc1907a0a3de5bb99ec1823a272c73f9cf5bae2273755893d388ae640ff405} 12{52fc1907a0a3de5bb99ec1823a272c73f9cf5bae2273755893d388ae640ff405} 7.5{52fc1907a0a3de5bb99ec1823a272c73f9cf5bae2273755893d388ae640ff405}


The above table shows that all car categories saw significant price drops due to GST effect. The SUV category saw the biggest price drop, with a decrease of 12{52fc1907a0a3de5bb99ec1823a272c73f9cf5bae2273755893d388ae640ff405} in the chargeable tax. Even the mid-segment and luxury cars saw a huge price cut.

Prices of most such vehicles were cut by up to Rs 3.5 lakh post GST roll-out. In Fiat Chrysler Automobile (FCA) India Pvt. Ltd. reportedly reduced prices of its Jeep lineup by up to Rs 18.49 lakh!

Also Read About 2018 Dacia (Renault) Duster

Leave a Reply

Your email address will not be published. Required fields are marked *