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Luxury cars are often under the eye of the authorities for being over-the-top purchases, and this has resulted in the cars attracting the highest amount of taxes. Rohit Suri, President and Managing Director Jaguar Land Rover, feels that the government should stop classifying luxury cars as 'sin goods' and reduce the tax on such vehicles.
In a statement made to PTI, the Jaguar Land Rover India shot-caller said that taxes should be reduced on luxury vehicles since manufacturers contribute healthily to the country's economic growth.
Mr Suri said, "The government calls it (luxury vehicles) sin goods. This does not allow the market to grow. We can't understand how it is a sin-good. I can understand something which impacts your health like cigarettes but does driving a car impact your health?"
"If you classify this (luxury vehicles) as sin goods then there are ten more goods like wearing expensive shirts or shoes, which are also sins. In that case, every five-star hotel should be sin and people going there should be called sinners," he added.
Luxury vehicles fall under the highest GST slab of 28 per cent with an additional cess of 20 per cent on sedans and 22 per cent on SUVs. That's a massive amount, and it pushes up purchase costs of the vehicles by a significant sum.
Mr Suri's comments come at a time when the auto industry is struggling to improve it's sales. Most manufacturers have requested for, and/ or are in favour of reducing taxes on cars and two-wheelers in an attempt to drive growth.
Mr Suri also said, "We employ around 2,400 people. We give employment to people across our value chain. If the market remains restricted then we are going to be handicapped. The market size is small, all because of the high GST rate that the government continues to apply."
Reports suggests that the Indian luxury car segment collectively retails about 40,000 units a year, of which Jaguar Land Rover's models retail about 27,000 units.
"We are very keen, we are hoping that the government will stop calling us sin goods. Do you want to stop the growth of the industry by classifying it as sin goods? It is something we are clearly not happy with the way it is being branded." Mr Suri added.
Thoughts About Manufacturers Wanting A Reduction Of GST For Luxury Vehicles
We feel this request is justified. Luxury car manufacturers retail a limited number of vehicles every year thanks to the high prices of their cars. Prices are high partially because of the unprecedented amounts of tax that the government demands from them. And what are 'sin' goods? With any product, the better the quality the higher the price. That does not make them a 'sin', does it?