The government has announced a
graded duty revision on cars, as part of the GST (Goods & Service Tax)
council’s rate revision. As part of this
graded increase, an additional cess of 2% has been levied on mid-size cars
(these include the likes of the Honda City, the Maruti Suzuki Ciaz, etc, a 5%
cess for larger cars like the Hyundai Verna and the Toyota Corolla and a 7%
cess on big cars like the Toyota Fortuner, Mercedes SUVs and cars, Audi cars
This additional cess on cars
could take prices above the pre-GST levels, feel several of the car
manufacturers. This cess is in addition to the 15% cess that is already
mandatory on all the cars, which again is in addition to the 28%GST rate.
“The decision to increase the cess
yet again is very unfortunate and totally overlooks the contribution we make to
the industry and to the economy. Though luxury car industry’s volume
contribution is very low, our value wise contribution is much higher and that
has immense potential to grow even more in the future, had there been fair
taxation. However, by continuous taxation of the segment, the overall revenue
generation is going to be hurt, as the increase in price is going to hurt
demand. It seems the contribution of luxury car industry to the total PV market
in India will remain constricted, though in the other developed economies, it is
on a higher side and continues to rise gradually. 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, ” said Roland Folger, MD &
CEO, Mercedes-Benz India
Rohit Suri, President and Managing Director,
Jaguar Land Rover India said, "While the increase in cess will impact
consumer demand, investment and job creation, we are glad that the Government
and GST Council took note of our concerns and somewhat moderated the increase
“Since the GST implementation
on 1st July we were witnessing increase in demand for Jaguar and Land Rover
brands and we are hopeful that this will continue in future as well," he
said, putting up a brave front.
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