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Prices of Four Wheelers to Shoot Up as GST Council Approves Cess Hike

Prices of Four Wheelers Set to Rise Post GST

While you were planning for a four-wheeler after the GST roll out, here’s some vital news for you.

GST Council has proposed the hike on cess for sports utility vehicles, large cars, and luxury cars. Although, the prices had fallen after the implementation of GST, they are all set to shoot up again from the existing 15% to 25%.

I think in the first place the cess of 15% originally announced was misplaced keeping all sedans at the same rate of 43% including 28% GST. This will now go up for SUV and luxury cars and hopefully in the next parliament session through an amendment to GST. One will have to wait for fine print on how luxury cars are to be defined. At this stage it appears they are maintaining the pre-GST effective rates with this increased cess. I would assume a normal growth while it may not impact the current thin market luxury cars have. Certainly the momentum of growth the earlier cess of 15% could have provided will be under strain, quotes Automobile Analyst, Sridhar V, partner, Grant Thornton India LLP.

This means that the legislative amendments would be required to increase the maximum ceiling of cess. of vehicles falling under the headings 8702 to 8703.

However, the automobile manufacturers haven’t really welcomed the decision with open arms as they would require them to re-evaluate their business plans and the hope of long required tax rationalization in this sector is lost.

Rolger Folder, MD & CEO, Mercedes Benz India said, “We are highly disappointed with the decision. It will also reverse the positive momentum that the industry wanted to achieve with the introduction of GST. Also, one month is too short a period to consider an upward revision in rates. The market performance should have been watched for at least six months, before it was relooked.