Recently it was rumoured that MPVs could get pricier as the GST council plans to revise their requirements for categorising a vehicle in the utility vehicle segment. Now, the rumor has become the truth in a surprising turn of events.
As per the latest revision by the Goods and Services Tax (GST) Council, purchasing an MPV with a powerful engine in India will get more expensive. The council has updated the criteria for categorising vehicles as utility vehicles.
Previously, SUVs had the highest GST rate of 28 per cent. However, according to the recent decision, the GST council will leverage a uniform GST rate from all multi-utility vehicles falling within the specific category, along with an additional cess.
On Tuesday, July 11, the GST council, under the leadership of Finance Minister Nirmala Sitharaman, discussed the issue with finance ministers from different states. The council decided to include these specific vehicles in the utility vehicle segment regardless of the names chosen by manufacturers for these vehicles.
Apart from the GST, an additional cess of 22 per cent will be charged for these on top of the 28 per cent GST. Vehicles with more than 4,000mm in length, engine capacity of more than 1,500cc, and ground clearance of more than 170mm fall under the utility vehicle category.
At present, cars have an additional cess ranging from one per cent to 22 per cent based on the type of the vehicle. The decision will clarify the definition of the vehicles that should pay the highest GST and cess charges.
Srivastava, Senior Executive Officer, Maruti Suzuki, told HT Auto, “From the various media reports, it appears that the peak cess of 22 per cent over the 28 per cent GST slab is now applicable for all vehicles fulfilling the three conditions of – more than 4 m length, more than 1,500 cc engine and unladen ground clearance more than 170 mm.”
Thoughts On GST Council’s Revised Policy On MPVs
The policy revision will see cars like Toyota Innova, Kia Carens, Kia Carnival, etc., becoming more expensive and might affect their sales directly. Any revision in the GST rates should be undertaken after a detailed analysis of the potential benefits and drawbacks, considering the broader impact.
