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GST on Luxury Cars, SUVs revised to 50% (28% GST + 22% Cess)

GST Council has increased total tax on luxury cars and SUVs to 50% from earlier 43%. The new rate might get effective starting October 1st.

In its meeting held on 9th September, the GST Council has revised the tax rate for SUVs and Luxury cars to 50%. The earlier tax rate on these cars was 43%, which included 28% GST and 15% Cess. The council, in its earlier meetings, had recommended revising the Cess to be 25%, making the total effective tax rate to 53%. However, we had earlier reported that the total effective rate might not go beyond 50%.

The GST on large cars will be 48% after implementation, whereas, mid-sized cars will attract 45% tax. The tax on all these segments of cars was earlier 43%, including 15% cess and the highest percent of GST. The effective tax rate, including GST and Cess, will remain the same for small and hybrid cars.

The automobile industry had pitched a similar hike to the GST Council because it felt that same hike for all segment of vehicles will affect the middle-class people. In the last meeting of GST council, it had approved an amendment suggesting 25% increase in Cess for the high-end cars.

There is, however, no confirmation yet on the date from which the new tax rate will get effective, however, sources suggest that the same might get implemented at the start of the next quarter, i.e. 1st October 2017.

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Kunwar Prithvi Singh Chauhan

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