Amendment in GSTGST Council approved hike in cess for Luxury Cars
The GST Council, on Monday (7 August), has hiked cess rates on sports utility vehicles (SUVs), mid-sized, large and luxury cars to 25 per cent from previous 15 per cent.
Expressing his disappointment over the new amendment in the goods and services tax (GST) law, Roland Folger, MD & CEO, Mercedes-Benz India said, “We believe this will be a strong deterrent to the growth of luxury cars in this country.”
Roland Folger, MD & CEO, Mercedes-Benz India mentioned, in an official statement, “This will also affect our future plans of expansion under ‘Make in India’ initiative, which aims at making and selling world-class products in India, with the latest technology for end consumers. We feel deprived as the leading manufacturer of luxury cars in India, who has been championing ‘Make in India’.”
“This decision will also reverse the positive momentum that the industry wanted to achieve with the introduction of GST. With this hike in cess, we expect the volumes of the luxury industry to decelerate, thus offsetting any growth in the potential revenue generation that could have come with the estimated volume growth.”
It is believed that the constant shift in policy makes long-term planning for the market highly risky, and this would only have an adverse impact on the country’s financial ratings.
However, the underlying demand remains healthy which is the driving force for the automobile sector. Those who had the demand for SUVs and Sedans have approached for deals and we believe that companies will be able to pass on the cess hikes on luxury vehicles/UVs to customers by price revision.
It is known that Companies such as Audi, Mercedes-Benz, Toyota had reduced prices on several of their luxury cars and SUVs by up to Rs 10 lakh passing on GST benefits to consumers.However, the proposal of further increasing the cess on the luxury car industry will dampen the spirits of not only the companies, dealers and customers but also workers and employees working in this industry.
With the festive spirit on, the july month sales has been positive and GST has been taken in the positive spirits. At Ensure, we have ensured spirited Sales of SVs, mid sized and luxury cars with demand flow. However, we look ahead for the future. The automotive industry is experiencing transformation of fuel vehicles to electric ones too.
The Government of India’s initiative in this direction has also provided a boost to the sector. Under the National Electric Mobility Mission Plan 2020, the government has set an ambitious target to achieve 60-70 lakh sales of hybrid and electric vehicles by 2020.
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About Ilaxi Patel
Ilaxi Patel is the Content Writer, Blogger and Social Media Manager of Ensure Cars >>>Dreams Unlimited, where she leads Content writing and social strategy, coordinates the blog editorial with Auto Expert Binal Patel, Director of Ensure and manages social media campaigns. She regularly blogs on Ensure, was chosen as a Google #WomeninTech and has spoken on panels for IT on occasions and on Parenting as an Author of ‘Guardian of Angels.’ She has indepth experience writing for the Government (Gujarat and MP) and wrote Governance Pages, News pieces and worked in Team of PM Narendra Modi for his personal website. She worked in the newspaper industry as Editor for a Supplement and Online Editor for the Press over a span of six years and currently engaged with Kids Newspaper (Education and Homeschooling too) at Kidsfreesouls.com.