The prices of Sports Utility Vehicle (SUV) and Multipurpose Vehicle (MPV) may increase in the coming times. The cess on SUVs and MPVs has been increased by 2% in the GST Council meeting held on Tuesday.
Cess increased on SUV/MPV
The GST Council has increased the cess on SUVs and MPVs from 20% to 22%, which is the highest rate of cess. This cess will be levied on top of the 28% GST applicable on SUVs and MPVs.
Read this also: Adani Enterprises raised Rs 1,250 crore through NCDs.
As of now, separate cess is imposed on utility vehicles on top of 28% GST depending on their size. To clear the confusion on who will be charged how much cess and who will fall in which category, the GST Council has made a slight change in the definition of SUV.
The GST Council has fixed three parameters for the definition of Utility Vehicle (UV). Any utility vehicle that fits in the slot of these parameters will attract 22% cess.
Three parameters for SUV
- 1- If the length of the vehicle is more than 4000mm or 4 meters
- 2- Vehicle whose engine capacity is more than 1500cc
- 3- Vehicle whose ground clearance is 170mm or more without riding.
What did Maruti say on the decision of the GST Council?
Shashank Srivastava, Senior Executive Officer (Marketing & Sales), Maruti Suzuki India, said, “From multiple media reports, it appears that the 22% cess over the 28% GST slab is now applicable to all vehicles that meet three conditions – Length should be more than 4 meters, engine capacity should be more than 1,500cc, and ground clearance should be more than 170 mm.
He said that, prima facie, this clears the confusion regarding the definition of 22% cess vehicles, especially the ground clearance taken in the case of non-passenger vehicles.
When asked if this will affect the prices of the vehicles, he said that ‘Maruti Suzuki does not have any vehicle with engine size above 1.5 liters except Invicto, but Invicto has only one hybrid version, That’s why top cess should not be applicable, however, for this we have to read and study the notification completely first.
How does the cess feel now?
At present, 1% to 22% cess is levied on vehicles depending on their type, now one of the benefits of changing the definition of SUV will be that the debate on how much cess will be applicable on SUVs is over.
Now the utility vehicles, which were paying 20% cess till now, will now be charged 22%. That is, whatever utility vehicles come on these three parameters, they will attract 22% cess, no matter what name the companies call them.
Now after the cess increase, SUV/MPV prices will increase as auto companies will pass on this cess to the consumer. There are many SUV/MPVs currently available in the market, whose prices may increase in the coming times, such as the Kia Carens, Toyota Innova Crysta, Toyota Highcross, etc.
Today auto stocks are trading with a slight decline, M&M’s share is down 1% till 9:25 am, Maruti is also down 0.60%.
