Prices of SUVs and MPVs to go up 2% following the GST cess increase
July 11, 2023
Synopsis
The GST Council in India has raised the cess on utility vehicles (UVs) by 200 basis points from 20% to 22%, leading to a price rise of 2% for UVs measured at over four metres. Currently, big UVs are subject to a GST rate of 28%, plus a cess of up to 22%. However, the SUV condition has been removed, meaning all larger SUV/MPVs which attracted a 20% cess rate will now have a 22% rate.
Owning a large utility vehicle which includes an SUV and an MPV (multi-purpose vehicle) will become more expensive. Prices of UVs, those above four meters are likely to go up by 2 per cent with the GST Council increasing the cess by 200 basis points from the current 20 per cent to 22 per cent.
Under the current GST structure, bigger UVs are levied with GST rate of 28 per cent and cess up to 22 per cent. The hybrid UV has a cess rate of 15 per cent, followed by two cess slabs of 20per cent and 22per cent respectively.
With the change in GST rate of bigger UVs (either petrol or diesel) will be levied with the highest cess rate of 22 per cent if a vehicle meets any of the following three specifications—first, unladen (without passenger weight) ground clearance of 170mm-- earlier this condition was on laden basis (with passenger weight), it is now unladen, second length more than 4 meter and lastly, over 1500cc engine capacity.
In addition, the condition popularly known as SUV has also been removed. This would mean all bigger SUV/MPV which are attracting 20 per cent cess rate so far will have cess rate of 22 per cent. This would mean SUV/MPV prices are likely to increase by 2per cent.
It’s not immediately clear which UV models would attract a higher cess as the specification published in the company’s sale brochure is different from the specification during the vehicle homologation. Homologation is a government issued certificate that allows a product to enter a market. The GST council goes with specification shared by the manufacturer during homologation.
The higher cess on UVs come amid a scorching pace of growth UVs have seen since the last three years. Passenger vehicle makers dispatched to their dealers a cumulative 363,563 units of UVs to their dealers in the first two months of the current fiscal. Their share in the total passenger vehicle dispatch rose to 54.61per cent from 51.50per cent in the same period a year ago. A total of 665,625 units of passenger vehicles were dispatched during the two months.
[The Economic Times]
