GST Cess on Luxury Cars & SUVs Increased from 15% to 25%, Applicable from January 1, 2018

GST Cess on Luxury Cars & SUVs Increased! A recent bill passed in the Lok Sabha replaced the ordinance issued around September 2017 regarding the cess on base 28% GST on cars above 4 meter in length. The New GST Cess Rate is Flat 25%, taking the total amount of tax on cars above 4 meter to 53%.

After the latest amendment in the rate , GST Cess on Luxury Cars will see an Increase of 10% from the base 15% cess issued in July 2017. As government fixed these values to 43% after GST roll-out, this bill will take the total value to 53% from January 1, 2018. Here is a table to clarify the changes based on different dates.

GST Cess on Luxury Cars & SUVs Increased

Old GST Cess – 15% | New GST Cess – 25% | Applicable from January 1, 2018

The actual increase of GST cess on luxury cars (SUVs in this case) will be just 3 percent while the most affected section will be the buyers from Honda City, Hyundai Verna and Maruti Ciaz segment. They will see an actual hike of almost 8% from the current tax rates.

Applicable from the first day of 2018, the new taxes will add up to the 2-3% price hike announced by most manufacturers. Sales trend may get a shock as buyers will prefer sub 4 meter cars with just 29% and 31% of tax rates on petrol and diesel engines respectively.

Buyers who are looking for a car under sub 4 meter section (i20, Baleno, Jazz) will simply get the price hike decided by the manufacturer. Government plans to increase the revenue and compensate state governments for losses that came through the implementation of GST.

The biggest jolt will be seen on the lineup of Mercedes Benz, BMW, Audi and other manufacturers of this segment as 3-5% is still too much for them. The increase of GST cess on luxury cars will turn up into a big number in revenue for both state and center government.