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SUVs, luxury SUVs to cost more as GST council approves hike in cess

GST council

New Delhi: The Goods and Service Tax (GST) Council on Sunday approved an amendment that will see an increase in the current cess levied on Sport Utility Vehicles (SUVs) and high-end luxury SUVs from current 15 per cent to 25 per cent.

This comes after the Centre, along with several states requested the GST council to amend the current cess on these vehicles as an “anomaly” has crept in while deciding the rates, that needed rectification. The council was headed by Finance Minister Arun Jaitley.

Under the GST rates, cars will attract the top rate of 28 per cent with a cess in the range of 1-15 per cent on top of it. While small petrol cars with engine less than 1,200 cc will attract 1 per cent cess, that with a diesel engine of less than 1,500 cc will attract 3 per cent cess. Large cars with engine greater than 1,500 cc and SUVs with length more than 4 metres and engine greater than 1,500 cc will attract a cess of 15 per cent.

This is levied on top of the 28 per cent that is already in place, which adds up to a total of 43 per cent. An additional 10 per cent increase will increase the GST rate on these SUVs to 53 per cent.

However, the prices of these vehicles will not be increased immediately as it requires amendment to the GST compensation law and will only come into effect next month.

There is mutual consent amongst members of the GST Council to have cess on high-end luxury cars and SUVs to be on the higher side so that it can be increased if the need arises.

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