Mid-sized, large cars, SUVs set to be dearer

Govt notifies GST cess hike

New Delhi, September 12

The government has notified levy of increased GST cess of up to 7% on mid-size, large and SUV cars. The GST Council on September 9 had decided to hike cess on mid-size cars by 2%, on large cars by 5% and on SUVs by 7% to bring tax rates on these cars at pre-GST levels.

The Finance Ministry late last night notified the hike in quantum of cess to be levied on cars, following which the new rates came into effect.

The effective GST rate on mid-size cars will be 45%, and on large cars it would be 48%. The rate will be 50% on sports utility vehicles (SUVs), which include cars with length exceeding 4,000mm and having a ground clearance of 170mm and above.

Car prices had dropped by up to Rs 3 lakh as the tax rates fixed under the Goods and Services Tax (GST) that came into effect from July 1, was lower than the combined central and state taxes in the pre-GST days. To fix this anomaly, the council raised the cess.

The Finance Ministry now has amended the notification 'Compensation Cess (Rate)', dated the June 28, 2017, and brought in the changes in the rate of cess to be levied.

However, cess on small petrol and diesel cars, hybrid cars and those carrying up to 13 passengers has not been raised.

Under the GST regime, cars attract the highest tax slab of 28% and on top of that a cess is levied.

An ordinance was promulgated last week to hike the cess from 15% to up to 25%. The Council then on September 9 decided on the quantum of hike in cess in various segments. PTI