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As per GST council meet 2023, automobiles are subject to an additional cess that varies depending on the type of vehicle from a minimum 1% to 22%
After the Goods and Services Tax (GST) Council clarified which vehicles will fall within the utility vehicle segment, purchasing an MPV with a strong engine in India is expected to become more expensive. SUVs have always been subject to the highest GST rates of 28%. The council has now declared that all multi-utility vehicles that fall under the same category as those listed by it will be subject to a uniform GST rate and an extra cess.
As per GST council meet 2023, which is chaired by Finance Minister Nirmala Sitharaman, met to examine the issue with finance ministers from various states. The council ruled that cars in this category, regardless of what name a manufacturer chooses to give them, shall be included in the utility vehicle segment. These vehicles will now be subject to a 22% cess in addition to the GST rates on SUV cars in India.
On top of the 28% GST, the cess will be applied on such automobiles. The council states that a comparable fee will be applied to any vehicles with a length greater than 4,000 mm, an engine displacement greater than 1,500 cc, and a ground clearance greater than 170 mm.
Currently, automobiles are subject to an additional cess that varies depending on the type of vehicle from a minimum 1% to 22%. Senior Executive Officer (Marketing and Sales) of Maruti Suzuki India, Shashank Srivastava, responded to the development by saying that the judgment clarifies the classification of vehicles attracting the highest cess, particularly with the ground clearance metric included. "From the various media reports, it appears that the peak cess of 22 percent over the 28 percent GST slab is now applicable for all vehicles fulfilling the three conditions of -- more than 4 m in length, more than 1,500 cc in engine size, and unladen ground clearance greater than 170 mm," stated Srivastava.
Srivastava added that Maruti Suzuki is unlikely to be impacted by the price increase because the company only offers the recently launched Invicto MPV, which will be included in the category. However, because Invicto is a hybrid-only vehicle, it will probably avoid the 22% cess. The development has not received an official response from other manufacturers. It is anticipated that the ruling will have an effect on MPVs such the Kia Carens, Toyota Innova Crysta, and HyCross. In the next few days, the ex-showroom price of these automobiles will rise as a result of all automakers' anticipated transfer of the additional tax burden to consumers.
