New GST Hike: Small Cars Unaffected But Large Cars And SUVs Get Costlier

toyota innova touring sport_(new price post gst)

SUVs above four-metre in length will see a massive cess hike of 7 percent while luxury cars will witness an increase of 5 percent

Despite the revised cess rates, much to the relief of the volume segment players, the smaller cars with petrol engines of upto 1,200 cc and diesel of upto 1,500 cc won’t see any changes in pricing. They stay put at 43 percent – 28 percent GST and 15 percent cess – but the mid-sized and larger segment cars will face the consequences from tomorrow.

The GST council has created a new midsize segment with GST rate of 45 percent – 28 percent GST in addition to 17 percent cess. Moreover, the luxury non-SUVs have been given a separate segment with GST rate of 48 percent – 28 percent GST plus 20 percent cess. The biggest impact can be felt at the SUV space as the vehicles with more than four metres length are slapped with 50 percent – 28 percent GST and 22 percent cess.

Category          Old GST        New GST
Sub 4-Metre Vehicles Petrol less than 1.2-litre (29%), No change
Sub 4-Metre Vehicles Diesel less than 1.5-litre (31%), No change
Sub 4-Metre Vehicles Petrol more than 1.2-litre & diesel more than 1.5-litre (43%) No change
Above 4-Metre Cars 43% 45% or 48% (luxury non-SUVs)
SUVs Above 4-Metre Long 43% 50%
Hybrid Vehicles 43% 43%
EVs 12% 12%

The cars stretching over four metres in length will see the rates up by 2 percent – from 43 percent to 45 percent. The luxury cars will witness an increase of 5 percent (to 48 percent) while the Goods And Service Tax rates for SUVs jumped by a massive 7 percent (to 50 percent) as mentioned above. It is important to be than any SUV stretching above four-metre is included in the higher cess range.

However, the new midsize segment and cars coming under luxury space as per the council have not been clearly specified. Initially, the Union Cabinet proposed a drastic hike in cess for luxury vehicles. At least, it did not come into effect but still the increase in GST rates has disappointed the automakers in the premium and luxury scale.

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It is considered to have a hefty impact on the festive season sales and according to Mercedes-Benz India’s, Managing Director and CEO, Roland Folger, the increase overlooks the contribution the German brand makes for the auto industry and the economy. He further said, it nullifies any price advantage customers had as they will be charged with prices almost as similar to pre-GST regime.

It was also pretty much the concern of Toyota as well. JLR stated that the cess hike would not only reflect on the sales but job creation and investment too while Audi India’s head, Rahil Ansari, was left disappointed with the sudden increase in GST rates. BMW insisted that it would influence on the stability and growth of the Indian auto industry. The hybrid and electric vehicles will continue with 43 percent and 12 percent GST rates respectively.