7% extra cess on SUVs; small cars exempt

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"Besides auto cess hike and tax on some commonly-used items, various issues concerned with traders and business houses by States are likely to be taken up at the Saturday's meeting".

This total GST tax rate on SUVs is still 4% lower as the pre-GST level taxes on this segment was at around 54%.

Vehicle prices had dropped by up to Rs 3 lakh as the tax rates fixed under the GST that came into effect from July 1, was lower than the combined central and state taxes in the pre-GST days.

For luxury cars and SUVs, the cess has been increased to 20 percent (of total 25 percent) from the present 15 percent.

"Following the ordinance on the GST amendment, we note the increase in the cess from 2-7 per cent on mid-, largesized cars and SUVs".

SUVs to incur hike of 7% in cess to now 22%.

The Telangana government, however, insisted that the GST on ongoing projects should be brought down to 5% as the higher tax rate may put an additional burden of Rs 9,000 crore.

About the increase in cess rates on automobiles, he said that while status quo has been maintained for small cars (petrol and diesel), hybrid cars and 13-seater vehicles, the Council chose to increase the cess rates for some segments.

The rate revision in over 40 items followed after the fitment committee noticed anomalies in GST levied in these products.

Tax on mid segment cars had gone down from 48% to 43% and the council today chose to increase cess by 2% to 45%, he said.

The GST meeting took place in Hyderabad on Saturday under the chairmanship of Finance Minister Arun Jaitley. "So we maintained a status quo on that", the minister said.

"These are transient challenges and has been rectified", Jaitley said.

Two days ahead of the GST Council meeting, the representatives of vehicle manufacturing bodies had conveyed to the government that the move would impact their future plan of expansion under the Make in India initiative.

Vehicle prices had dropped by up to Rs 3 lakh following the implementation of the GST from July 1. For the rest, it will be 10 October. "With this increase in Cess now, the prices are bound to leap back to the pre-GST regime, in some cases higher than the pre-GST regime, thus negating altogether the benefits of GST regime", Roland Folger, MD & CEO, Mercedes-Benz India said. The cess goes to a fund meant to compensate states for revenue losses in the first five years of the GST regime.

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