Luxury car buyers’ joy of buying a premium car has short lived as the Goods and Services Tax Council plans to raise the cess on luxury automobiles from 15 per cent to 25 per cent. Implementation of the same will take a while as it requires amendment of GST compensation laws. A government official who is aware of developments spoke to media, “The council approved an amendment to the GST law to enable an increase in the rate of levy of compensation cess”.
Currently, under GST all cars are placed under a highest tax bracket of 28 per cent and excluding cess the maximum of 40 per cent can be levied. Sub-4-meter petrol cars with engine capacity of up to 1200cc attract a 1 per cent cess, while small diesel cars having 1.5-litre engine or less attract 3 per cent cess in addition to the 28 per cent GST. SUVs and premium cars attract 43 per cent including cess and post an additional 10 per cent cess, it will overall rise to 53 per cent.
Post implementation of GST on 1 July, a majority of car manufacturers in the country had passed on the price reduction benefits to customers. However, a few of them had also mildly hiked the car prices due to additional cess on small cars. GST revision details will be known in the days to come, however for potential car buyers, it is a good time to buy one before the price hike.