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Get ready to pay more for luxury cars and SUVs while small cars remain same

  10 September,2017

Yes, all the cheer of the GST is now over as more cess has been slapped on luxury cars and SUVs. Small cars remain the same which would be a relief but it was expected. SUVs it seems are the worst affected but extent of cess is albeit still than what was orginally recommended. SUVs above 4m now stand at 50 percent whereas the earlier rate was 43 percent. Luxury cars above 4m are classified with 48 percent which is a less increase from SUVs and it was earlier 43 percent. On midsize cars it is 45 percent. All under 4m cars though have their rates unaffected which means it is 43 percent for under 4m cafs with an engine above 1.2 (petrol) or 1.5 (diesel) while it is 31 percent and 29 percent for under 4m cars with an engine below 1.5l for diesel and 1.2l for petrol. Hybrid vehicles are still at 43 percent while EVs do not have any cess with a rate of 12 percent.

Thus expect carmakers to increase prices of SUVs, luxury and midsize cars soon with SUVs being the most expensive. Understandably the reaction is of dissapointment from carmakers. Roland Folger, MD & CEO, Mercedes———Benz India has said that The decision to increase the Cess yet again is very unfortunate and totally overlooks the contribution we make to the industry and to the economy. Though luxury car industrys volume contribution is very low, our value wise contribution is much higher and that has immense potential to grow even more in the future, had there been fair taxation. However, by continuous taxation of the segment, the overall revenue generation is going to be hurt, as the increase in price is going to hurt demand.

Rohit Suri, President and Managing Director, Jaguar Land Rover India has said that while the increase in cess will impact consumer demand, investment and job creation, we are glad that the Government and GST Council took note of our concerns and somewhat moderated the increase in cess.

Words- Sunil Kumar

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