The Union Cabinet had earlier approved the increase in cess on mid-sized, large cars, SUVs and luxury cars to 25 per cent from current 15 per cent under the new GST regime.
The GST Council which met in Hyderabad on Saturday increased the cess on mid-sized cars from 43 per cent to 45 per cent. Similarly, the cess on large cars was raised to 48 per cent from 43 per cent. On SUVs, cess will now be 50 per cent instead of 43 per cent. However, there were no change of cess announced for small cars.
The Union Cabinet had earlier approved the increase in cess on mid-sized, large cars, SUVs and luxury cars to 25 per cent from current 15 per cent under the new GST regime.
Commenting on the development, Abdul Majeed — an auto analysts with PwC — said, "GST council has taken the mid path, and benefit is provided to all categories across different segments compared to the pre-GST regime. This is a good move and it should help all segments to grow."
Roland Folger, MD & CEO of Mercedes?Benz India, who has been vocal against the move said, "The decision to increase the cess yet again is very unfortunate and totally overlooks our contribution to the industry and economy."
Dr Pawan Goenka, MD of Mahindra & Mahindra, said, "We are grateful that the council has very thoughtfully not raised the cess to the maximum level enabled by the ordinance. The council has basically restored pre-GST relative excise duty differentials between the various categories of vehicles."
The hybrid vehicles cess has not been increased, effectively giving these vehicles a 2-7% Cess relief. We are awaiting the exact definition of the categories. Whatever is the impact of the increased Cess will reflect in the revised pricing from the effective date.
"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," Folger further added.
Rahil Ansari, Head, Audi India said the taxes on this industry were already very high and we expected the unfulfilled potential of this segment to increase after the implementation of GST and rationalization of taxes. "Even if the rumoured cess hike of 10% was not concluded, the prices will go up again, which is disappointing. We will need to study the impact of this hike on the buyer sentiment."
However, RC Bhargava, Chairman of Maruti-Suzuki India Ltd (MSIL) in an interview said that the announcement on car cess are very much on expected lines and he never expected GST to bring down the prices of car.
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