Higher 40% GST tax on luxury vehicles might unexpectedly lead to a decrease in their price
In a significant move to streamline the tax structure, India's GST Council has announced revised GST rates for various categories of vehicles, effective from September 22, 2021. The changes aim to simplify the tax system, moving from a four-slab structure (5%, 12%, 18%, and 28%) to a more straightforward two-rate system of 5% and 18%.
The Centre has reduced GST for small cars and three-wheelers from 28% to 18%. Small cars are defined as four-wheelers with petrol, LPG, or CNG engines up to 1200 cc and a length of up to 4000 mm. For diesel cars, the engine capacity and length should not exceed 1500 cc and 4000 mm, respectively.
Three-wheelers will also benefit from a 10% decrease in GST, with the new rate set at 18%. Lorries and trucks, categorised under transport vehicles (HSN 8704), will attract 18% GST.
However, a new 40% GST rate has been introduced for mid-size and large vehicles, including cars, SUVs, XUVs, MUVs, and MPVs with engine capacity above 1500 cc, length exceeding 4000 mm, and ground clearance of 170 mm or more. This new rate does not include any additional cess.
Starting from September 22, passenger vehicles with engine capacities over 1500 cc, lengths over 4000 mm, and ground clearance of at least 170 mm, such as luxury and large SUVs from brands like Toyota (Fortuner), Ford (Endeavour), and Mahindra (Alturas G4), are subjected to this new GST rate of 40%, increased from the previous 28% GST plus 17-22% cess.
Motorcycles with an engine of 3500 cc or less will have a GST rate of 18%, while those exceeding that engine capacity will attract 40% GST. Ambulances will also be taxed at a GST rate of 18%, down from 28%.
Road tractors for semi-trailers above 1800 cc engine capacity will see a GST drop from 28% to 18%. Trailers and semi-trailers of tractors with 1800 cc and non-road tractors will be taxed at 5%.
This change is being referred to as a "big Diwali gift" to the nation, as the government seeks to stimulate growth in the automobile sector. The new 40% GST rate applies to a small number of items, primarily luxury and 'sin' goods, as the government decided to end the compensation cess.
The revised GST slabs are part of a larger plan by the GST panel to make the tax structure more manageable and user-friendly for both businesses and consumers.
Read also:
- Understanding Hemorrhagic Gastroenteritis: Key Facts
- Stopping Osteoporosis Treatment: Timeline Considerations
- Trump's Policies: Tariffs, AI, Surveillance, and Possible Martial Law
- Expanded Community Health Involvement by CK Birla Hospitals, Jaipur, Maintained Through Consistent Outreach Programs Across Rajasthan
