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As per media sources, the GST Council has specified the criteria for a passenger vehicle to be called as an SUV, which includes engine capacity > 1.5 litre and car length > 4 metre and ground clearance >170 mm. This criteria will remain sacrosanct across states with all passenger vehicles meeting this criteria to be levied 22% cess rate taking the overall indirect tax incidence to 50% (28% GST rate + 22% cess rate).
Most in Indian market parlance were already adhering to this said rule with most compact SUV models like Tata Nexon, Hyundai Venue, Kia Sonet, etc. being levied ~29-31% indirect tax rate (GST+cess) while mid-SUV segment models like Hyundai Creta, Kia Seltos, Maruti Grand Vitara were being levied ~45% indirect tax rate. Only large SUVs like M&M’s XUV-700 and others meet the criteria of an SUV fixed by government and being levied ~50% total indirect tax rate. In our opinion, nothing changes for the industry. This clarification has no implications from OEM as well as customer standpoint (vehicle prices to remain broadly unchanged for most models)