Cabinet Approves GST Cess Hike for Luxury Cars and SUVs

Luxury Car Cess Hike Increase

Indian Cabinet has approved the ordinance of raising the GST cess on luxury vehicles and SUVs from the present 15% to 25%. This means there will be a hike in the price of luxury vehicles.

Finance Minister, Arun Jaitley, briefed the reporters that the decision for the rise in cess shall be privy to GST Council and that “the ordinance is only an enabling law. This does not mean the cess (levy) will automatically increase”. He further added, “Objective of any taxation policy can’t be that luxury goods becomes cheaper. Relief has to be given to a common man’s item and not a luxury item.”

At present, sports utility vehicles(SUVs) and luxury cars are under the 28% tax slab along with 15% cess. This means the sales of luxury cars like Volvo, Jaguar Land Rover, Mercedes Benz, would have their sales affected and need to redraw their plans.

Rohit Suri, Managing Director of Jaguar Land Rover in India is positive, “We earnestly hope the government and GST council will give due consideration to this matter and desist from raising the cess.”

The ordinance was the amendment of Schedule to the GST (Compensation to State) Act 2017 that specifies the maximum cess for luxury cars and SUVs as 15%.