Business India

Luxury vehicle manufacturers’ disappointed over hike in cess

Luxury vehicle manufacturers on Saturday expressed their disappointment over GST Council’s decision to hike the cess on mid and high-end cars.

After the Council meeting in Hyderabad, Union Finance Minister Arun Jaitley said that while status quo has been maintained for small cars (petrol and diesel), hybrid cars and 13-seater vehicles, the GST Council decided to increase the cess rates for some segments.

Consequent to the GST Council’s decision, the cess on mid-segment cars has been increased by two per cent, for large segment cars it has been increased by five per cent and for SUVs by seven per cent.

Roland Folger, MD and CEO of Mercedes-Benz India termed the decision to increase the cess as “very unfortunate”.

“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,” he said.

According to Rohit Suri, President and Managing Director, Jaguar Land Rover India, the hike in cess will impact demand, investment and job creation.

“While the increase in cess will impact consumer demand, investment and job creation,” he said, adding that they were “glad that the government and GST Council took note of our concerns and somewhat moderated the increase in cess”.

Last month, the Finance Ministry had disclosed that the decision to recommend a hike in cess cap was taken after the GST Council noticed that post the roll-out of GST, the total tax incidence on motor vehicles had come down as compared to pre-GST regime.

However, Abhishek Jain, Tax Partner, EY said: “The auto industry would be largely happy as the GST Council only marginally increased the cess for mid size, large cars and SUVs and did not increase it by 10 per cent which was the upper cap approved by the Ordinance.”

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