The council has decided to hike the cess on luxury vehicles from the current 15 percent to 25 percent. The revision of cess is not expected to be immediate as any hike will require an amendment to the GST compensation law.
So if you are looking to buy an SUV or luxury car, this is the right time to buy. As per ET, a government official aware of the council's discussions said, "The council approved an amendment to the GST law to enable an increase in the rate of levy of compensation cess,"
The official also stated that the overall view of the council was to have the cess on luxury automobiles at a higher rate so that it can be increased if there is a requirement.
As per GST, the rate for cars is 28 percent and cess of 15 percent for luxury vehicles, which sums up to 43 percent. Once the revision is complete, the revised GST for SUVs and luxury cars will be 28 percent and cess of 25 percent which totals to 53 percent.
Before GST, SUVs attracted a tax rate of 55.30 percent and luxury cars or bigger cars with length more than 4 metres with engine capacity more than 1,500cc attracted 51.80 percent.
After GST, most of the luxury car manufacturers passed on benefits of GST to customers as prices were reduced.
There have been several concerns over higher GST cess on hybrid vehicles, with the increase in cess for SUVs and luxury cars, the government bring it on par with hybrid vehicles.