GST revenues have failed to achieve the targets especially after politically driven sops are being declared for every election. Luxury cars, a token of affluence, have always been a soft target for ‘tax the rich’ ideology and they have been shot once again.
The parliament, yesterday, tabled a bill to increase the additional cess on luxury cars from 15 per cent to 25 per cent over the base 28 per cent slab, taking the overall taxation to 53 per cent. The increase in cess defeats the ethos of GST aimed at uniform taxation with continued dilly-dallying by the authorities. This is the second hike in GST for luxury cars since its implementation six months ago.
While the bill is yet to be passed by the Rajya Sabha, any chances of reduction in the proposed hike seem bleak. The only saving grace is that the new taxation of 53 per cent is just a shade lower than the 55 per cent taxation before the GST ruling. We can expect stiff resistance from SIAM and all quarters of the automotive industry who are already fighting the long battle for tax sops on hybrid cars.
By definition, luxury cars include everything from the D-segment sedans like the Toyota Camry all the way to Mercedes-Benz, Audi, BMW, Jaguar, Land Rover, Lexus, Volvo and the uber premium ones like Rolls-Royce, Bentley and their likes.