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Car prices to go up on GST cess hike

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Car prices to go up on GST cess hike
Hyundai India, the country's second-largest carmaker, said vehicle prices will go up substantially as the government hikes tax on auto mobile manu facturers as part of a revi sion of GST ra tes. Y K Koo, MD and CEO of the company's local operations, said Hyundai will have to pass on the increased cost as the government moves to hike cess on larger vehicles to 25% from existing 15% (levied over 28% GST rate).Koo said that the measure is surprising and shocking as it is being proposed in just second month of the GST regime. “We are little confused...and really do not know what exactly is going on.“ Companies say they are not aware of what the government means when it says the cess on `luxury vehicles' will be revised. “We are wondering as to what is the definition of luxury , is it meant for any particular engine size, or will it be based on length of the vehicle. Also, what is the percentage of hike that will be mandated for our types of vehicles?“ Koo said. The auto industry has expressed disappointment at the government's decision to revise the duty as it comes too early in the GST regime which was implemented from July this year. The GST Council has cleared the measure and now it awaits a legislative approval. Once approved, the move can see prices of Hyundai's cars such as Verna and Elantra sedans and SUVs like Creta and Tucson go up -from Rs 50,000 to over a lakh (in case entire 10% is passed on).

Other cars that could be impacted due to the measure may include Maruti's Ciaz, Honda's City and Jeep's Compass.Almost all the luxury models from companies such as Mercedes Benz, Audi, BMW and Jaguar Land Rover will see price increase. “We are disappointed and I am also irritated,“ Rahil Ansari, head of Audi in India said as he forecast a 20-30% fall in luxury car sales due to the decision.

The Times of India, New Delhi, 23rd August 2017

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