Luxury cars prices to go up by 5 per cent in India

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"Following the ordinance on the GST amendment, we note the increase in the cess from 2-7 per cent on mid-sized, large-sized cars and SUVs". The hybrid vehicle cess has not been increased, effectively giving these vehicles a 2-7 per cent cess relief, he added.

A hike of 5 per cent has been declared on luxury cars which makes the total taxation to 48 percent, that includes 28 per cent GST and the 20 per cent additional cess.

However, SIAM feels that the long standing anomaly in the taxation of 10-13 seater vehicles could have been fully corrected and these should have been fixed at a GST rate of 28 per cent without any cess as these are public transport vehicles and not for personal use. The council, in its earlier meetings, had recommended revising the Cess to be 25%, making the total effective tax rate to 53%. Kitchen gas lighters will attract 18 per cent as against 28 per cent GST earlier while prayer beads will fall in 5 per cent slab against 18 per cent previously. We see the prices of our products going up proportionately, which may almost reflect the pre-GST scenario.

Manufacturers are still awaiting the exact definition of categories and whatever is the impact of the increased cess, it will reflect in the revised pricing from the effective date.

Cotton quilts costing up to Rs 1,000 will attract 5 percent while those above that will face 12 percent GST, against the earlier uniform rate of 18 percent. The Council raised the cess, to fix this anomaly.

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.

Reacting to the hike in cess, Audi India Head Rahil Ansari said: "Even if the rumoured cess hike of 10 per cent was not concluded, the prices will go up again, which is disappointing". The luxury vehicle makers, however, are strongly opposing the measure, saying they are already paying higher duty and should not be categorised into a separate heavier-tax segment. After the GST Council meet on Saturday, Finance Minister Arun Jaitley had said that in the case of large vehicles, where affordability of consumers is high, the cess has been increased.

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