GST Council recommends increase in cess for luxury cars

“This proposed increase in cess will most definitely adversely impact sales and we will be forced to re-evaluate our business plans”.

The report cited sources saying that Kerala, West Bengal and Bihar insisted in Saturday’s meeting that the process must be laid down and companies should be pressurised to bring down the prices as several ministers argued that prices have not come down after GST.

Luxury vehicle makers are crying over the rate change that has taken place in the last one month and not for the rates that were prevalent in the pre-GST era. The additional GST cess has already drawn stiff criticism from luxury carmakers in India. The move could impact all cars that have a platform length above 4 metres, which account for a third of the volume of domestic vehicle sales, industry sources said.

Once the rates of 150 items have been released, more items would be added later. “The process of rate adjustments might continue”, Satya Poddar, senior tax adviser at EY, told a TV channel. The GST Council may discuss this issue of increasing compensation cess during its meet in Hyderabad next month and announce the changes through an amendment to the act.

Mr. Roland Folger, MD & CEO, Mercedes-Benz India had this to say about the latest amendment in GST Law.

Mercedes-Benz, India’s leading luxury carmaker said that the new decision will affect their future plans of expansion under “Make in India” initiative. “We feel deprived as the leading manufacturer of luxury cars in India, who has been championing ‘Make in India, ‘” Folger added.

Kolkata: The state Assembly on Tuesday passed the State Goods and Services Tax (SGST) Bill, 2017, even as chief minister Mamata Banerjee said her party’s ideological position on GST would not alter. The hike in cess will make them fall in the luxury auto segment.

BMW Group India president Vikram Pawah also said that long-term stability in tax reforms and regulations are of paramount importance to foster growth of any industry in the country. Ansari said the proposal to further increase cess would dampen the spirits of workers and employees, besides hitting companies, dealers, and customers.

Also, hybrid vehicles with engine capacity of more than 1500 cc and mid segment hybrid cars of less than 1500 cc fall in the category.

Top luxury vehicle manufacturers have criticised the government’s proposal to hike cess on large cars and SUVs to 25 per cent from the current 15 per cent and said prices will surge above pre-GST levels.

The proceeds of the cesses in the GST regime are meant to be used to compensate state governments for any revenue loss due to GST. The council will decide later when the higher rate will be applicable. Besides job workers in dyeing, knitting, texturising and embroidering, etc, the tax cut will benefit thousands of small textile/garment units.

A one-day workshop on Goods and Services Tax (GST) for dealers of the Capital Complex was conducted by the District Administration and Department of Tax and Excise at the state Banquet Hall here on Tuesday.

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