Medium-to-large cars and sport utility vehicles (SUVs) are going to be expensive as the Union Cabinet on Wednesday approved an Ordinance enabling the Government to raise the Goods and Services Tax (GST) cess on them to 25% from present 15%. Car companies and its association, Society of Indian Automobile Manufacturers (SIAM), termed the move detrimental for growth momentum of the segment.
“Although the clearance of the Ordinance is just an enabling clause for the GST Council to be able to increase the cess but it is clearly evident that the Government’s intention is to increase the overall tax burden on many different categories of vehicles. This will increase the post-GST price of many vehicle categories from Pre-GST level and have a negative impact on sale of such vehicle models in the market,” said a SIAM statement.
Actually car prices had dropped by up to Rs 3 lakh after GST got implemented from July 1 and this move is being seen as an attempt to rectify the anomaly where rates of certain common use items had gone up but luxury cars were costing less.